Industry experts have called on the ACT government to rethink their proposed developer licensing scheme after claims it was “rushed through” parliament.
The proposal, introduced by Sustainable Building and Construction Minister Rebecca Vassarotti late last year, aims to stop decades of unethical behaviour in property development by extending responsibility for relevant issues up to 10 years, even if the company is insolvent.
The scheme will also allow the Territory to order developers to fix defects and force those within the industry workers to pass a fit and proper person test to be licensed – those who do the wrong thing will be fined or potentially banned.
However, with the legislation being the first of its kind, industry experts have more than a few concerns over the policy being rushed out the door without consideration for the impact on industry projects.
The Housing Industry Association (HIA), Australia’s peak housing body, went so far as to urge the government to “go back to the drawing board” after accusing the legislation of losing its focus.
“As an industry, we accept the need for accountability in the development and construction sector, particularly for large and complex buildings. However, the ACT government needs to provide greater clarity of purpose in its proposed scheme,” said HIA Executive Director Greg Weller.
“As it stands, the current Bill covers the field – everyone is ‘a developer’, and that’s not right.
A threat to industry
According to Mr Weller, the current system already required builders of standalone houses and low-rise apartments to be licensed in the Territory, and customers were protected against dodgy dealings with warranty insurance – making the licensing just another layer of regulation impeding home builds.
The Property Council of Australia also echoed these fears, claiming the personal liability element risks driving residential investment away from the homes Canberra desperately needs.
“We want to make it very clear that what is currently being proposed in this legislation will create an unwelcoming environment for much-needed housing investment,” said Executive Director Shane Martin.
“The government is asserting personal liability will not have significant flow-on impacts. If the government honestly believes this is the case, we ask them to conduct an independent economic analysis to justify this risk to investment.
“It is ludicrous to road-test legislation — the first of its kind in the country, and likely the last — without having the evidence to support it.”
Mr Weller warned that the proposal would see developers painted as ‘guilty until proven innocent’ in cases of litigation.
“Rather than requiring the person or group pursuing an action to establish that the builder or developer has caused the alleged problem, this effectively requires they prove their innocence,” he said.
“In many circumstances this could be impossible, with a builder having no control over what happens after handover.”
Master Builders Australia questioned whether architects and designers would also be considered liable for potential legal action, but no clarity has been given from government.
Property Council Chief Executive Mike Zorbas said the proposed legislation will have serious unintended consequences for the region.
“In pursuing this experimental personal liability for company directors, the ACT is positioning itself as the only jurisdiction in Australia with such ill-targeted and investment-chilling regulation,” Mr Zorbas said.
“The deep reservations held by the Property Council of Australia’s Board of Directors as expressed to the government have not been allayed.
“The government runs the risk of single-handedly gifting community assets, jobs and investment to neighbouring jurisdictions where more balanced regulatory settings are in place.”
