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New Regulatory Regime Set to Rein in Developers

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Developers tendering for work across Queensland will be required to hold licences under new legislation passed last month.

A new building industry fairness bill, which came into effect in mid-July, sees the removal of the head contractor exemption and instills significant penalties for developers in breach.

The latest legislation is part of sweeping reforms to address longstanding concerns about the financial accountability, security of payment and flammable cladding that have enveloped the industry.

The amendment, which was passed by parliament on the recommendation of the Transport and Public Works Committee, is designed to prevent unlicensed developers subcontracting out building work to licensed parties, and beef-up regulation across an industry notorious for poor oversight.

In March, the committee invited representatives from the Urban Development Institute of Australia, the Australian Institute of Architects, Master Builders, the Subcontractors Alliance and the Construction, Forestry, Maritime, Mining and Energy Union (CFMEU) to provide accounts on the role that property developers play in the construction sector.

▲ Committee members considered the impacts of developer's financial and operational capacity, ethical behaviour, and work practices.
▲ Committee members considered the impacts of developer's financial and operational capacity, ethical behaviour, and work practices.


CFMEU state secretary Michael Ravbar said regulation around the head of the contractual chain would improve the viability of the industry.

“It doesn’t matter what you do—you could have the best regulatory regime in the world, but if it doesn’t have all of the industry participants captured in it, it’s pointless,” Ravbar said.

“[Developers] carry the least amount of risk on a project and they are the ones who stand to gain the greatest reward.”

McCullough Robertson partner Matt Bradbury said the legislative change is expected to have far-reaching implications for construction contracts and tenders across the state.

“It is not presently clear when this change will take effect, and it is not known if it will apply prospectively or retrospectively—which could have drastic consequences for existing contracts and tenders,” Bradbury said.

“If developers are required to submit to licensing requirements, it is possible that the QBCC’s powers will be further expanded to investigate the activities of developers, re-affirming the status of Queensland’s building and construction sector as being one of the most heavily regulated in the country.

“It is advisable that unlicensed head contractors seek advice about applying for relevant licenses as soon as possible.”

▲ Last month, the WA government backflipped on draft legislation to bring in cascading statutory trusts to protect payments to subcontractors when builders fail or go into administration.
▲ Last month, the WA government backflipped on draft legislation to bring in cascading statutory trusts to protect payments to subcontractors when builders fail or go into administration.


In the race to run new rulers over the industry, the NSW government recently installed Building Commissioner David Chandler who has been equipped with new powers to withhold occupation certificates for buildings that are not up to standard.

Under terms of the Residential Apartment Buildings (Compliance and Enforcement Powers) Bill 2020, passed in June, the regulator will have the ability to prevent settlement.

The commissioner has also begun to identify developments using a ratings tool it has been developing with data company Equifax that rates the track record of developers, builders and certifiers.

In most states and territories of Australia, the industry regulator focuses on licensing and disciplinary issues, while control of building sites has rested with under-resourced local authorities, which have little capacity to act.

ACT taskforce to crack down on ‘dodgy’ developers

Although some states have been reluctant to adopt a licensing scheme for developers, efforts are already under way in the Australian Capital Territory to explore the creation of a licensing scheme for developers.

The state government has recently established a team of public sector certifiers for consumers to connect with in relation to approved building work.

ACT building minister Gordon Ramsay said the new taskforce aims to restore confidence in the state’s construction sector by holding developers to account.

“We have seen too many cases where property developers have forced other parts of the industry to cut on costs and influence process, only to eventually wind up projects and leave owners with the bill for their dodgy work,” Ramsay said.

“[Consumers] should not have to chase non-existent companies for building defects, while the culprit is able to wind up one company and continue to operate in our community.”

The team of public sector certifiers will sit alongside the government’s licensing scheme for property developers and break the link between developers and building certifiers.

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Article originally posted at: https://theurbandeveloper.com/articles/queensland-review-role-of-developers