Building Legislation Amendment Bill

Building Legislation Amendment Bill

(Debate on Bill, 21 November 2023, Legislative Assembly, NSW Parliament)

I make a contribution to the Building Legislation Amendment Bill 2023. Decades of fast-tracking development at the expense of design excellence, sustainability and quality workmanship has made defects in new apartments a common occurrence. In the Sydney electorate, where 80 percent of my constituents live in apartments and any new development is a multi-dwelling, I have heard shocking stories of defects like flooding balconies, fire stairwells too small for an evacuation, and cracking foundations. Getting remedies through warranties is challenging and often the cost ends up being borne by owners through massive levies, despite defects not being their fault or something they could have foreseen. The situation has been unfair and it has undermined confidence in the building sector. Exposés of substantial defects at Opal Tower and Mascot Towers, which left owners in peril and unable to live in or rent their homes while facing bankruptcy, led the previous Government to act and commence real reform.

The Building Legislation Amendment Bill continues the recent trend of restoring consumer safeguards in the building industry. It comes at a vital time, as the State prepares to increase density and build more homes. Importantly, the bill will make it harder for builders and developers to phoenix their companies to avoid liability for defects they created. Phoenixing in the construction industry has been described as endemic in New South Wales. Directors create new companies for specific projects and as the project finishes up, profits are taken, assets are moved to other companies and the initial company is placed into liquidation, leaving owners no avenues to pursue directors for building defects. Meanwhile, those directors and managers continue to operate in the industry through different companies. The bill will make it harder for persons who have been convicted of an offence under the Corporations Act, or who were the director or involved in the management of a construction company that has gone into administration, from continuing to operate by strengthening the conditions for issuing and renewing a licence and cancelling one.

The Owners Corporation Network has identified additional loopholes that should be closed to prevent builders from continuing to work in the industry if they have attempted to avoid their obligations to fix defects. A director of a company that becomes a debtor under a judgement of money is excluded from holding a builder's licence but no-one else involved in the management of the company is penalised. Furthermore, a builder or developer whose licence is suspended because they did not comply with a court tribunal order to pay money for a defect can continue to operate in the industry via other existing licences. I ask the Minister in reply to outline how these loopholes will be addressed.

Other changes in the bill will help facilitate and encourage the uptake of decennial liability insurance, which provides significant potential to give apartment owners a simple and quick pathway to resolving defects without the costs and administrative burden. Building insurance has been vexed since the collapse of HIH in 2001. To make home warranty insurance more sustainable for insurance companies, it became a last resort scheme, with claims limited to situations where the builder died, disappeared or became insolvent. Then the scheme was simply scrapped for buildings of four or more storeys.

The introduction of the defects bond was the first real opportunity in years for owners of new multi-unit dwellings to pursue defects outside the court system. However, the bond is too low for most defect bills, has a limited availability period and requires extensive negotiation between parties. The return of insurance through the decennial liability insurance scheme provides an alternative option that is superior. Decennial liability insurance covers fixes to all identified defects within a 10-year period. It has the benefit of encouraging good building practices, with good builders more likely to get insurance and insured builders more attractive to engage and buy from. I hope decennial liability insurance grows to be useful and sustainable.

Other changes create a chain of responsibility for building products, from design, manufacture, sale, designed use and installation. Everyone across the chain will have responsibility to ensure that products are safe and that unsafe products are identified and banned. The bill also extends the Building Commission's remit from only apartments to class 1 buildings, which include houses and terraces. The Building Commissioner has been a game changer for the industry, and I pay tribute to the passion, dedication and expertise of David Chandler.

Defects in a new home are challenging, regardless of the type. If we want to clean up the building industry entirely, we should take a holistic approach to enforcement and monitoring. For most people, a home is the biggest investment, and uncovering defects is the start of a headache. Defects affect liveability, value and insurance, and can significantly disrupt life. New South Wales is discussing how to move forward with a massive lift in the number of homes under construction to help improve affordability. But building new homes will only improve affordability if people have confidence that those homes will be safe, liveable and sound. I congratulate the Government on introducing this important bill.

Let's work together to celebrate and protect our great city!