Dodgy builders targeted by Victorian Building Authority after Porter Davis collapse

Tough penalties will be introduced for builders who fail to take out domestic insurance as the government tightens Victoria’s building regulator’s authority following the Porter Davis collapse.

Dodgy builders who fail to take out insurance for their customers will soon face tough penalties under sweeping new industry reforms introduced after the Porter Davis collapse.

Premier Daniel Andrews on Tuesday announced the Domestic Building Contracts Act will be overhauled to issue Victoria’s building regulators with more powers to monitor builders.

Under the new legislation, the Victorian Building Authority will be able to audit builders and monitor whether obligations have been met.

A specific new offence will also be created to catch out builders who fail to take out domestic building insurance prior to taking a deposit.

The Porter Davis liquidation in March exposed how the building company was taking deposits from customers without having an insurance policy in place.

The exact penalties to be imposed on rogue operators is yet to be decided on, but Mr Andrews warned the penalties will be significant, although they will not be retroactive.

“Clearly there are some in the industry who are intent on doing the wrong thing,” he said.

“The best thing to have done is to have paid that insurance and to have paid it promptly, so that your customer is covered. It’s simply wrong to withhold that money and it is not your money.”

Mr Andrews said the reforms are part of a “comprehensive review” to improve the building sector.

“We want to make sure that every single Victorian making such a significant purchase, such a big moment in their lives, that they’ve got the proper framework to protect them,” he said.

The Porter Davis liquidation in March exposed how the building company was taking deposits from customers without having an insurance policy in place. Picture: Ian Currie

Opposition spokeswoman for home ownership Jess Wilson said the announcement fell “well short” of the action needed to address significant issues within the sector.

“Victoria’s residential construction sector is clearly in crisis, and the Andrews government must expand its piecemeal announcement today to include a comprehensive review of the functioning of the Victorian Building Authority and Victorian Managed Insurance Authority, and critically must extend the same support offered to Porter Davis customers to any Victorian home builder who has paid for insurance, but has been unable to access due to the failings of the regulator,” she said.

“The Andrews government’s commitment to strengthen domestic building insurance protections is welcome, but will be cold comfort to Victorians who have lost deposits due to previous non-compliance.”

The proposed laws are expected to sail through parliament with Greens leader Samantha Ratnam giving in-principle support.

“We’ll look at the details ... In principle we welcome reforms that strengthen support for Victorians especially given the issues we’ve faced in the building industry in the last few months,” she said.

It comes as the VBA Board appointed Better Regulation Commissioner Anna Cronin as its new chief executive following the resignation of Sue Eddy last week.

The VBA had been under pressure to replace Ms Eddy after a horror year in which the Herald Sun revealed the tragic death of a staff member and a probe was launched into allegations of a toxic culture.