Hansard debates

Nick STAIKOS (Bentleigh – Minister for Housing and Building, Minister for the Suburban Rail Loop) (10:17): I move:

That this bill be now read a second time.

I ask that my second-reading speech be incorporated into Hansard.

Incorporated speech as follows:

The Bill amends the Building Act 1993 (Building Act), the Building Legislation Amendment (Buyer Protections) Act 2025 (Buyer Protections Act); the Building and Plumbing Administration Enforcement Act 2026 (BPAE Act), the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Act 2025 (Fairer Payments Act); the Building and Construction Security of Payment Act 2002 (SOP Act), the Cladding Safety Victoria Repeal Act 2026 (CSV Repeal Act), Water Act 1989 (Water Act), the Sale of Land Act 1962 (Sale of Land Act), the Emergency Services and Volunteers Fund Act 2012 (ESVF Act) and the Land Tax Act 2005 (LT Act).

The main purposes of the Bill are to:

• modernise legislation to reflect current industry practices and support improved regulation by:

• resolving key challenges with the Place of Public Entertainment scheme;

• making further amendments to the SOP Act to enable its effective function; and

• enabling any regulations made under the Building Act to incorporate any documents by reference;

• improve protections for consumers in Victoria for housing and building matters by:

• establishing a scheme for the private market to provide 10 years of insurance cover in relation to relevant building elements of new residential apartment buildings;

• enabling building surveyors to issue emergency orders and building notices and orders in relation to land the condition of which has been altered due to natural or human impacts, including if it presents risks to life, safety or property; and

• supporting the risk-mitigation of flood-prone areas through designation powers for the Minister of Housing and Building;

• enabling regulations to be made which allow for limited exemptions from, or delay of the payment of, insurance premiums under the Statutory Insurance Scheme;

• providing transitional arrangements over two years during the establishment period of the Statutory Insurance Scheme, including by:

• enabling the Building and Plumbing Commission to specify, in a Premiums Order, the method, process or approach for calculating insurance premiums and any other amounts payable under Statutory Insurance Scheme;

• enabling a transition to minimum financial requirements in a way that minimises disruption while continuing to control risks; and

• enabling the Premiums Order to be exempt from the requirement to prepare a regulatory impact statement for a period of 12 months;

• expanding exemptions and rebates for the emergency services and volunteers funding levy; and

• resolving various issues relating to the land tax exemption for an owner’s principal place of residence that is unoccupied due to construction or renovation.

Reforms to the Place of Public Entertainment permit scheme

Events and festivals are an important part of Victoria’s cultural, social and economic fabric. The Bill will help to reduce the administrative burden on both event organisers and regulators by enabling a new framework for approvals required under the Building Act and Regulations. This supports a vibrant events industry while continuing to ensure attendee safety.

Under the Better Approvals for Business Program, the then Department of Jobs, Skills, Industry and Regions conducted an Events and Festivals Approval Review in June 2023. The review was conducted as part of the Victorian Government’s broader regulatory review program which aimed to identify obstacles for event and festival business approvals in Victoria. The review identified key challenges from stakeholders that included event organisers, industry groups, regulators and government agencies.

One of the key challenges identified was for event and festival approvals under the Building Act. These approvals are intended to ensure public safety at events and gatherings, cover both permanent venues and temporary spaces and focus on risks such as crowd-safety, emergency access and the safe use of structures including stages and marquees.

The Bill addresses key challenges related to uncertainty about when approvals are required, inconsistency in how requirements are interpreted and applied, duplication with other event approval processes, and late-stage uncertainty around whether approvals will be granted. It enables a risk-based framework, supporting proportionate regulation and giving event organisers and regulators certainty and clarity for event approvals under the Building Act.

The amendments to the Building Act will be supported by detailed reform to the Building Regulations. This approach will support more flexible and responsive management to the fast-paced and changing events and festival industry.

The Bill enables the definitions of “place of public entertainment” (POPE) and “public entertainment” to be detailed in the Building Regulations. This will clarify when permits are required for public entertainment events and promote the consistent interpretation of permit requirements. Event organisers face limited ability to secure early assurance of structural compliance. The Bill establishes an optional early certification pathway for prescribed temporary structures, reducing the risk of late-stage rejection of structures and delays in approvals due to unforeseen approval conditions, and easing the burden on the permit issuer.

The Bill enables a report and consent process to reduce duplication where decision-makers within the POPE approvals framework may consider matters already assessed by other authorities. This process will streamline application processes and better connect requirements under the building framework with other agencies and processes involved in event approvals.

Applications for permits in the scheme are often assessed through the professional judgement of individual approvers, without statewide guidance. This has led to inconsistent decision-making across local government, uncertainty for event organisers and varying levels of attention to safety risks. The Bill will enable the Minister for Housing and Building to issue binding Guidelines setting out the matters that must be considered when assessing permit applications. The Bill also enables the Minister for Housing and Building to prescribe requirements and include prescribed conditions that may be imposed by the prescribed approver. These may be tailored for factors including but not limited to event type, scale, location or season and can be updated as new risks emerge.

The Bill enables timeframe notifications for permits to be prescribed through the Building Regulations, ensuring the adaptability to the fast-changing events industry.

The existing approvals framework can result in overlap between occupancy permits issued under Division 1 of Part 5 of the Building Act and those related to public entertainment. This overlap can create duplication, inconsistent enforcement and confusion – particularly when organisers must seek multiple, disconnected permits for a single event. The Bill enables flexibility for existing buildings to be used for public entertainment where they are in a prescribed class of building by retrospectively having an occupancy permit approved or allowing amendments to be made to an existing occupancy permit.

Security of Payment Act Tranche 2 Reforms

The Bill continues reforms to the Security of Payments Act, which helps ensure that building contractors, subcontractors, workers and suppliers get paid on time and in full.

Two of the 12 ‘Tranche 2’ reforms recommended in the Legislative Assembly Environment and Planning Committee Inquiry Report, ‘Employers and contractors who refuse to pay their subcontractors for completed works’ are being implemented in this Bill.

To implement recommendation 14, the Bill amends the SOP Act to add a new section requiring that the responsible Minister conducts regular reviews of the SOP Act’s effectiveness in improving financial conditions for those working in the construction industry. The new provision also enables the responsible Minister to consider reforms in other jurisdictions, including internationally, that might be adopted in Victoria to improve the SOP Act’s operation. These reviews will be conducted every three years, with a report on the review’s findings and any recommendations to be tabled in Parliament. This amendment will put Victoria at the forefront of Australian states and territories, none of which require regular reviews of their security of payment legislation. Victoria will be the leading jurisdiction in ensuring that security of payment laws maintain their effectiveness in an evolving construction industry.

To implement recommendation 23, the Bill amends section 46 of the SOP Act to extend to authorised nominating authorities (ANAs), the immunity from personal liability that is currently conferred on adjudicators who discharge their functions in good faith. ANAs play a critical role in security of payment legislation, managing the process for adjudicating disputed claims and overseeing the adjudicators who resolve those disputes. Victoria is the only state that does not confer immunity on its ANAs. The amendment will ensure ANAs are better supported when performing their critical role, by removing the financial and operational burdens they face as a result of not being covered by section 46’s immunity.

The Bill also makes minor amendments to resolve technical issues with two provisions of the Fairer Payments Act, which were to amend the SOP Act but have not yet commenced. The Bill amends section 23 of the SOP Act to ensure that adjudicators properly consider all relevant matters in determining a dispute involving a performance security claim and section 45 of the SOP Act to ensure that an adjudicator can recover fees in appropriate circumstances. These amendments ensure that adjudicators are incentivised to accept and resolve disputed claims and further, that all relevant materials related to those claims are considered in making their determinations. The Bill repeals the two provisions of the Fairer Payments Act that are inconsistent with these amendments and are no longer required.

Expansion of incorporation by reference powers for building regulations

The Bill makes minor amendments to the Building Act to expand the regulation-making power to enable all regulations made under the Act to incorporate any document by reference.

Decennial Insurance for residential apartments will be introduced

The Bill further delivers the Government’s commitment to strengthen financial protections for apartment owners by introducing a decennial insurance scheme. Buying an apartment is often the single largest purchase a Victorian will make in their entire life, and they deserve to move into the safe and high-quality home they paid for, without the burden of self-rectifying costly defects. Historically, some off-the-plan and other apartment purchases represented a greater consumer risk than buildings with a rise of 3 storeys or less, and the introduction of this decennial insurance scheme is part of the Government’s consumer-focused building reforms to reinforce confidence in Victoria’s apartment market.

The Government has already introduced a mandatory developer bond scheme for newly constructed residential apartment buildings (of four or more storeys) to strengthen protections for these homeowners. This Bill takes it a step further by introducing a decennial insurance scheme for these buildings. Decennial insurance is a private market insurance policy taken out by a developer for the benefit of an owners corporation and will provide cover for any relevant defects in a relevant building element of a residential apartment building for a 10-year period after an occupancy permit is issued for the building. Decennial insurance will help to lift the quality of building work on new apartments in Victoria, will help reinforce consumer and investor confidence in these apartments, and will reduce the need for complex and costly litigation to resolve disputes. While consumer protection is the focus of this reform, decennial insurance will also encourage and assist developers and builders to identify and rectify defects early, when they are easiest and most cost-effective to fix.

When the decennial insurance scheme commences, developers will be able to arrange for a decennial insurance policy to be issued, as an alternative to arranging for the issuing of a developer bond. This will give the building industry more flexibility without compromising on consumer protections. Introduced by the Buyer Protections Act, the developer bond scheme requires developers to issue a bond prior to applying for an occupancy permit with the money secured used to cover the cost of rectifying defective work. In the long term, when the decennial insurance market in Australia matures, the Government proposes that the developer bond scheme will be wound down in favour of a mandatory decennial insurance scheme to reinforce Victoria’s consumer protections framework in the building industry.

To the extent possible, the decennial insurance scheme has been modelled on the decennial insurance scheme introduced in New South Wales in 2022 to support the development of a competitive and affordable decennial insurance market for residential apartment buildings in Australia.

The Bill requires that a designated insurer must first obtain approval from the Building and Plumbing Commission of a decennial insurance product before it can be marketed to developers.

The 10-year period of cover, commencing from the issuing of an occupancy permit for the building, will apply to major building elements of the common property of a residential apartment building and any relevant building elements in private lots that are prescribed as a relevant building element. It is a first resort, no-fault policy, meaning that an owners corporation may make a claim for a relevant defect without having to prove who is liable for the defect.

If the claim is accepted, the insurer will arrange for or pay for rectification of the relevant defect. Payouts will be permitted in prescribed circumstances, and the insurer may recover its costs from at-fault parties. If the insurer refuses a claim, the Bill allows regulations to be made that will prescribe a consistent dispute resolution process.

To support robust regulatory oversight of the decennial insurance scheme, the Bill introduces certain requirements for developers to notify the Building and Plumbing Commission when they have arranged for the issuing of a policy, and if the insurer has cancelled a policy. A designated insurer is also required to notify the Building and Plumbing Commission if it cancels an insurance policy in accordance with Commonwealth legislation regulating insurance contracts. The Building and Plumbing Commission will also be able to direct developers and insurers to provide certain information about issued decennial insurance policies.

Amendments to the Buyer Protections Act to allow for regulations to be made with respect to the insurance premium payable under the Statutory Insurance Scheme

The Bill amends the Buyer Protections Act so that, once it amends the Building Act, it will be possible to make regulations under the Building Act that delay or remove the requirement to pay the insurance premium under the Statutory Insurance Scheme (SIS) in appropriate cases, such as where entities like Homes Victoria or other social housing providers act as a developer but retain ownership of the homes they build. Such entities are not eligible to make a claim under the SIS because they are subject to exclusions aimed at preventing developers from benefitting from the SIS. The amendment to the Buyer Protections Act will permits regulations to be made under the Building Act that will enable prescribed entities to only pay the relevant premium for the SIS if they sell an applicable property within the warranty period, which will allow subsequent owners to benefit from the protections provided by the SIS. This ensures homeowners remain protected, without unnecessarily adding to the cost of delivering these homes.

The Bill will also amend the Sale of Land Act to ensure particulars of any applicable cover under the SIS are referenced in statements under section 32 of that Act.

Premiums order

The Bill will also amend the Buyer Protections Act to enable the BPC to specify a method, methodology, process or approach to calculate premiums under the SIS for the first two financial years. The amendment is an interim arrangement while the SIS is being established and will give the BPC the flexibility to ensure premiums structures reflect the claims activity in a first resort insurance product. The amendment will exempt the premiums order from the requirement to complete a regulatory impact statement under the Subordinate Legislation Act 1994 for 12 months. This approach is consistent with the setting premiums for Workcover and the Transport Accident Commission in Victoria.

Amendment in relation to minimum financial requirements

The Bill includes provisions for a transition into minimum financial requirements. The purpose of the amendment is to enable the minimum financial requirements to broadly replicate the process the Building and Plumbing Commission currently follows to determine if a builder is eligible to take out domestic building insurance cover. For an initial period of two years, the minimum financial requirements determined under this provision will serve as the financial probity requirements under the Building Act. The Bill also enables guidelines to be issued to support the Building and Plumbing Commission’s administration of the minimum financial requirements, following consultation with stakeholders on the proposed minimum financial requirements regulations in early 2026, and this amendment is an interim measure until 1 July 2028 to ensure consumers are protected by Rectification Order powers and first-resort domestic building insurance as smoothly as possible, and to reduce uncertainty for the building industry at a time of global economic disruption.

Issuing a rectification order

The Bill clarifies that the Building and Plumbing Commission must consider whether to issue a rectification order before deciding a claim under the SIS. The rectification order is critical to the financial sustainability of the SIS.

Minor and technical amendments resulting from the Buyer Protections Act

The Bill makes several minor and technical amendments to provisions in the Building Act.

Emergency orders, building notices and building orders

The Bill will improve community and environmental safety by enhancing the regulatory tools available to municipal building surveyors where condition altered land, such as a landslide, undermines the stability of private property.

The Bill makes amendments to the power to issue building orders, emergency orders and building notices to deliver recommendation 30 from the Report of the Board of Inquiry into the McCrae Landslide (McCrae Inquiry). These amendments will improve how local government and private landowners manage risks to the community and the environment on and from private land susceptible to landslides and other natural hazards, or which is fundamentally affected by human impacts.

Both the McCrae Inquiry and a 2025 Building Appeals Board decision in relation to it highlighted a gap in the current legislation. Currently a building surveyor cannot require landowners to undertake rectification, or stabilisation works when condition altering events – such as landslides, erosion, floods or owner or occupier activity – compromise the integrity of land and pose risks to occupants or the wider community.

The Bill amends the Building Act to close this gap by creating a new category of “condition-altered land”. This will give building surveyors the power to issue emergency orders, building notices or building orders in circumstances where the condition of the land is fundamentally altered but a building on said land is not affected. This will include circumstances where land on which a building is situated has been affected by a condition-altering event and the condition of the land poses a danger to life or property.

Designated Flood-prone Areas

Poor quality or out of date information about flood risk has severe impacts on building design requirements during the land development process. In some cases, this has resulted in development being subject to delay due to the need to undertake redesign work to meet flood risk mitigation requirements or due to costly or time-consuming appeals to the Building Appeals Board.

In October 2025, the Government announced a package of planning and building reforms to better manage flood risk. These reforms will implement a hazard-based state-led approach to provide better flood risk information and enable faster decision-making during development. To ensure land development decisions will account for new information about flood risk, the Government will use new modelling data to inform amendments to the planning schemes through its new streamlined planning scheme amendment process and is amending the Building Act to introduce a new ministerial power to determine which land is in a flood-prone area.

The Bill gives the Minister for Housing and Building the power to declare areas of land that have a 1 per cent or higher risk of flooding in any 12-month period as being designated flood-prone areas. The Minister’s decision is to be based on the advice of floodplain management authorities about which land is in a flood-prone area. The Bill amends the Water Act to require floodplain management authorities to provide their advice about flooding and controls on development to the Minister for Housing and Building and to the Minister for Planning.

Land that is determined to be at a lower level of risk is generally safe for vehicles, people and buildings, provided any development of the land accounts for the risk of flooding. Under a flood-prone area designation for a parcel of land, the Australian Building Code Board’s building and construction standards are to be applied under a building permit, to mitigate the risk of flooding. For developments requiring a planning permit, planning schemes will continue to be used to regulate land use and development in areas that have a moderate to very high-risk of flooding. This new state-led approach will also reduce the costs and administrative burden for councils.

The Bill also amends the Sale of Land Act to require that a vendor’s section 32 statement must state if the land is in a designated flood-prone area, so that a purchaser of the land will be informed of this.

The new power to determine flood-prone areas of land and improved vendors statements will ensure that land owners, developers, building surveyors and councils will have the most up-to-date information on flood risk, and that appropriate construction standards are applied to new builds at the start of the development process.

Emergency services and volunteers fund

The Bill amends the ESVF Act to expand exemptions and rebates for the emergency services and volunteers funding levy (ESVF). The ESVF is an annual property levy collected by local councils via rates notices to fund a range of Victoria’s emergency services.

As part of reforms to the ESVF Act in 2025, the Eligible Volunteers Rebate Scheme was introduced allowing eligible emergency services volunteers or life members to access an annual payment to offset the ESVF on their principal place of residence (PPR) or farmland. The reforms also legislated an increase in the fixed charge component of the ESVF for residential land not used and occupied as the owner’s PPR, which is scheduled to commence from 1 July 2026.

As part of the 2025–26 Budget Update, it was announced that the increase in the fixed charge component for residential land not used and occupied as the owner’s PPR would be delayed by 12 months to 1 July 2027. The Bill gives effect to this delay and provides for the Treasurer to determine the date that the increased fixed charge applies, through notice published in the Victoria Government Gazette. This will provide flexibility for the change to be delayed beyond 1 July 2027 should further time be necessary to finalise and test information-sharing arrangements.

The Bill also introduces a partial ESVF offset for community housing organisations, which will operate similarly to the Eligible Volunteers Rebate Scheme. Community housing organisations will be eligible for an offset of 50% of the ESVF fixed charge for residential land owned or managed by the organisation, in recognition of their role in providing not-for-profit housing to Victorians on a low income or with special needs. The Treasurer will also be able to determine the date that the community housing organisation offset commences through notice published in the Victoria Government Gazette, allowing the new scheme to commence in conjunction with the fixed charge changes.

The Bill will also expand access to existing ESVF exemptions and offsets from 1 July 2026. The Bill broadens the existing ESVF exemption for Homes Victoria so that all land owned by Homes Victoria is exempt: currently, land owned by Homes Victoria is only exempt if leased to an individual or registered agency for the purpose of public housing. This will simplify administration by councils as most land owned by Homes Victoria is used for public housing. The Bill further enables authorised representatives of eligible volunteers to apply for and receive a rebate under the Eligible Volunteers Rebate Scheme, so that an executor, administrator, assignee or agent may apply on behalf of a deceased volunteer. Finally, the amendments extend the Eligible Volunteers Rebate Scheme to volunteers who hold a right to occupy premises in a retirement village who are liable to pay the ESVF under an arrangement with the retirement village owner or for any other reason.

Land tax

The Bill amends the LT Act to resolve various issues relating to the land tax exemption for an owner’s principal place of residence (PPR) that is unoccupied due to construction or renovation. The amendments simplify the exemption and addresses areas where it is not operating as intended and will commence from 1 January 2027.

It provides that an owner may nominate the date of issue of a planning or building permit as the start of works for determining when the exemption begins to apply. This amendment will provide landowners more control and flexibility over the timing of the exemption, especially in cases where there is a delay between issue of a planning or building permit and the actual start of construction or renovation. If no nomination is made, the exemption period will start from actual construction, which is the latest possible commencement date.

The Bill also simplifies the exemption’s intention requirement, which currently requires owners to intend to use and occupy the land as a PPR within 4 years of the start of construction or renovation. The exemption was previously available for a maximum of 4 assessment years, but since 2024 the exemption may be extended for up to 2 additional years where additional time is required to complete construction due to builder insolvency. The Bill amends the occupation requirement to be timed within 6 months of completion of construction or renovation to cater for cases where the exemption period lasts longer than 4 years.

The Bill also relaxes the existing requirement that owners are required to start use and occupation of their PPR by 31 December where construction started and completed in the same year, so that owners will have until 1 July in the following year to start occupation. The amendment will support homeowners who undertake quicker constructions or renovations.

Finally, the Bill amends the ‘dual’ land tax PPR exemption so that a joint owner who has departed their former PPR and obtained the exemption to construct or renovate their new PPR will not be able to obtain the exemption for their interest in the former PPR in the second year after they ceased to occupy it. This amendment ensures that a dual PPR exemption is only available for a second year if the person is not benefiting from a PPR exemption for other land.

Commencement

The Government’s intention is that some provisions of the Bill will commence on the day after Royal Assent and others upon proclamation when certain supporting regulations have been made.

The default commencement date is approximately 18 months after the Bill is introduced into Parliament, to provide sufficient time to manage the interaction with the BPAE Act and to develop the required complex supporting regulations. Supporting regulations are to be developed for the POPE reform amendments and decennial insurance amendments, which will be technically complex, require extensive stakeholder consultation and involve a number of critical matters to be prescribed under the Bill’s enabling provisions. POPE reform amendments will also involve a high volume of matters to be prescribed in regulations under the Bill’s enabling provisions.

The Bill modernises legislation to reflect current industry practices, supports improved regulation, and improves protections for consumers in Victoria’s housing and building system.

The Bill will also expand exemptions and rebates for the emergency services and volunteers funding levy and resolve various issues relating to the land tax exemption for an owner’s principal place of residence that is unoccupied due to construction or renovation.

I commend the Bill to the house.