We're always looking though at innovative ways that we can do better as well and one of the things I'd like to highlight is the increased collaboration that is happening between the regulators at the moment.
So in Queensland we regularly meet with Steve and his team in Victoria and most recently had a meeting with the NSW Building Commissioner as well.
So one of the things we are doing is trying to work together to improve things more holistically.
But as the Minister said earlier, the reforms are underway in Vic are designed to create a more robust, transparent and trustworthy system for everybody.
And so today, the goal of this speech is to share some of the practical lessons from Queensland's experiences and hopefully these will help you to navigate the coming changes with confidence.
I wanted to share that the QBCC has been operating a scheme of first resort since 1992.
The scheme was actually established in 1977.
So we have over 45 years’ experience n schemes of first resort and a lot of data.
So because of this, we have actually quite a lot of lessons to share.
And I think there may be some people in the room who recently were involved in a review of our insurance scheme as well.
So we are taking on board a lot of expert opinions on how we can make things better, but hopefully we can also share some of our learnings with you.
So the rules are changing here in Victoria.
So now is the time to rethink your risk appetite and reframe your approach.
I know that people in this room today from many different backgrounds, I know we have a lot of engineers, architects, builders, CEOs and directors and surveyors.
And so all of you hopefully will take something from this speech today and apply it into your business.
I'm hoping that you will leave today with some ideas, maybe some tips, maybe some cautions, but also how to reset your processes because you will need to do that.
It might require you to reach out to some professionals to help you through that.
And I would strongly suggest you do because the changes even for ourselves are quite complex as regulators.
And so where you do need that support, I think it is always good to reach out to the experts.
So Queensland, we are a one stop shop regulator as well.
All in all, Queensland and all the regulators around Australia have their own regulatory frameworks.
But at the core our aims are the same.
Safer buildings, consumer confidence and accountability themes that everyone today has spoken about.
And as the chief building regulator in Queensland, I'm always looking for ways to strengthen our regulatory posture, looking at ways to adapt the regulatory tools that we use to create more financially sustainable outcomes across the building and construction industry.
And that's why we're all here today.
The QBCC is a one stop shop.
So what has that helped us to do?
It has helped us to be more accountable.
People know the buck stops with us, you know, it also enables us to derive a lot of insights from our data and it is something we're trying to improve at the moment.
Steve had some really great data and insights today and in Queensland we've just performed the first year of our regulatory strategy and in the coming weeks we will be publishing quite a lot of data on what we have done and the outcomes and the behaviours that we are seeing in industry.
So I encourage you all to have a look at that as well.
The data will help us to understand what's going on in industry, but more more importantly, the dispute resolution journey so we can see things from beginning to end.
And this makes clear to us the true cost of disputes for all parties involved, builders, consumers and regulators alike.
And the scope of our functions is quite significant.
As you can see from the slides, we license over 124,000 contractors.
We manage hundreds of millions of dollars of insurance policies and you can see the claims values up on the screen.
That's just from the last financial year.
We handled thousands of complaints annually and we review the positions financially of all the companies who have licenses as well as their minimum financial requirements.
We also oversee a very comprehensive enforcement framework.
Last year in terms of minimum financial requirements, we had $17 million reinjected into the building and construction industry.
One of those was actually from one company, an $11 million capital injection and that shows that our proactive regulatory engagement is strengthening the financial stability of the industry.
None of us want another Porter Davis.
Bringing all these levers together under the One Stop shop gives us the ability to see trends early and act with a whole of systems perspective.
And what we have heard from industry in Queensland, and I'm sure it's the same here, is that you want to see more of that data as well to help you in your business models.
And so we've just completed, like I said, the first year of our 2025 to 27 regulatory strategy.
And I think there will be some really good insights for all different practitioners in this room.
So this should not be news to anyone in the room.
This is your regulatory shift entering into your new regulatory era and the launch of the BPC is that first step.
And obviously, there are quite a few more rolling out of new legislation to come.
And that is a fundamental change in your risk exposure.
We do know that we're waiting on some of the detail and that will obviously guide a lot of what we do.
One of the big changes for me that I've noticed is your 10 year rectification.
Which obviously is quite similar to the UK and parts of Europe where 10 to 12 years is standard home warranty or latent defect insurance.
And we did already here today, is somewhat modelled on the decennial liability insurance proposed in NSW.
It's a little bit longer than we have in Queensland, but I will share what I can from our six year and six month liability tail.
So I'm just going to share this slide on productivity because obviously productivity and quality are intertwined in terms of increasing regulation and legislation.
Sometimes people say this increases red tape and decreases productivity, but I'm here to share some things that might actually say otherwise.
But defect identification and rectification are at the heart of regulatory activity.
We know that we've had 2 productivity reviews in the last 12 months.
There has been the National productivity review into building construction and I just took part, took in the QLD productivity inquiry as well, where there were quite significant submissions from industry and we ourselves put forward a submission as well.
But I think we all have the same interests at heart.
We don't want inefficiency, but defects actually causes inefficiency.
So I'm going to talk a little bit through some stats in the last year.
So in Queensland last financial year, here are some of our key stats.
5772 complaints, 48,300 defect items, 307 disputes though were resolved before they got to building inspection.
Of those complaints, we issued 12121 directions to rectify and 416 penalty notices.
So that's what we issue when there's a failure to comply with a direction to rectify.
So you're binding dispute rectification orders will be similar to this.
So you can see from that there is a 1/3 non-compliance with directions to rectify.
We're able to issue those 6 years and 6 months after completion.
Obviously, yours is 10 years post occupancy, so a little bit of a difference there.
But that's just a snapshot of what we're seeing.
And I will talk a little bit further about the ongoing costs of failure to rectify.
But a key lesson we have learned is that early rectification not only protects your reputation, but actually does reduce cost.
So my key tip is invest in quality assurance and make sure you do comply with those directions to rectify as soon as you can because there are some consequences, not only reputational damage from published non-compliance, but there are financial penalties as well.
What I will say is Queensland's penalties are nowhere near what Victoria is going to see, but one of the tools we do have is that we have demerit points attached to our penalty infringement notices.
So if you don't comply with the DTR, not only will you get fined, but you will lose points.
And as those points decrease, you may actually also lose your license.
So that for us has actually been a really good regulatory tool to encourage people to comply.
But again, the lesson is - resolve defects early.
The quicker that the issue is fixed, the more likely that you can keep your client relationship, protect your reputation and avoid it going on to formal enforcement.
And I will share some of the costs of enforcement as well, so you can weigh that up in your in your risk exposure.
As I said before, I know that Victoria's regime is now extending to 10 years post completion.
So some lessons from Queensland.
What does a long tail of liability mean for you?
It means that you as builders must maintain long defect records, project close outs will face greater scrutiny and unresolved defects could affect sales, insurance premiums and finance.
So the the tail is something that you should all be really considering.
Now in your business models.
If you had a defect raised 10 years after occupancy and BPC came in and wanted to enforce rectification, how would you manage it and what would the cost be of rectifying that in 10 years’ time?
The time to prepare is now.
So I'm going to talk to you a little bit about dispute resolution because it's something we've been spending a lot of time on and also very critical in terms of some of the new powers you'll be seeing with the BPC.
So Queensland's experience up on the slide and we know that you'll soon be seeing binding dispute resolution orders in Victoria, but in Queensland we've been trialling some early dispute resolution methods.
So something a little bit different.
As we heard today, the aim is to bring everybody on the journey.
So it's self-regulated effectively and we only step in when we really need to.
We ask parties to voluntarily participate in early dispute resolution and all mediation and conciliation where the defects aren't high risk.
But where they don't, we are then going to proceed with more traditional dispute resolution powers and make administrative decisions and they will go on to QCAT, which is our VCAT equivalent.
But as Anna said earlier, we want to reduce the amount of matters that are going to the administrative tribunals because the cost not only for you, but the consumers and the court system are massive.
It can often be many years before there's a final determination of an issue.
And I'm sure some people in this room will have experienced that.
So again, early action pays off.
The numbers tell a story.
So we've had a 2-year pilot program for mediation and conciliation and our conciliation team can resolve a case in just over one month, so just over 30 days.
And I've got some quotes out from participants that I'll share with you soon.
Compared to a normal traditional dispute resolution path with us, five months.
If you go on to formal litigation, you're looking at 2 years.
There's nearly a 2 year backlog in QCAT at the moment.
I'm not sure what VCATS is, but the cost difference is even starker.
In Queensland, we have calculated that it costs $130,000 on average to pursue a matter all the way through to litigation.
In a recent case, we had 200 complaint items in one complaint and nearly all of them, 97%, were resolved through mediation and conciliation.
Saving not only stress but cost as well.
And it's not just about cost.
As I mentioned, we do have some quotes that I'll show you soon, but we do survey all of our claimants through the home warranty scheme and through our dispute resolution process.
And our surveys consistently show from both builders and consumers alike that there are high levels of satisfaction when resolved when we resolve things quickly and fairly.
I do understand that most of the disputes that we see aren't deliberate.
Most are about misunderstandings.
So in the main, what our conciliators have seen mismanaged expectations, documentation gaps and miss miscommunication.
So they're the main things.
So the lesson again is clear, don't wait to be forced into dispute resolution, step in early and keep control of your outcome and avoid those heavy costs of escalation.
So now I want to talk about the insurance scheme that you will be seeing come in maybe in the next 12 months.
And Queensland has the first home warranty scheme of first resort in Australia.
And this has been a model of what Victoria will adopt.
So first resort, what does it mean?
It actually means that our consumers don't need to fight three years of legal disputes before being protected.
It means if something goes wrong, if there's incomplete work or defects, they can come straight to the scheme, get support and move forward.
And it is a powerful way to restore confidence.
As the minister said, that's the goal, restoring confidence in our industry.
But I want to share that the the first resort doesn't actually mean no accountability if the scheme pays.
So this is in Queensland.
We pursue recovery from those responsible and because of that we will engage third parties to complete the rectification and the costs are always higher than if the original builder had addressed the problem.
Rectification builders on our panel, they factor in many things you can see up on the screen into their costs.
And builders say to us, but I could have fixed it for less myself.
That's exorbitant and that's true.
But if you don't take responsibility and things escalate, then this is the cost and we will recover that.
So I do want to share a story about a major footing issue we had and some significant subsidence throughout the years and years of monitoring.
The cost to rectify from when it was originally detected right through to the end was significantly increased and the engineer for the footing design was held accountable but refused to pay.
So we took it all the way.
And at the end of the District Court matter, they did have to pay, but they had to pay all of the legal costs on top, too.
And in some of the most serious of cases, we actually see homes incapable of being rectified.
We actually have to issue an order for demolition and reconstruction of the whole building.
We've paid over $5.8 million in one year on subsidence claims.
So I guess my point is, have you considered the costs of consequential damage as well over 10 years, that consequential damage can be quite significant.
So the tip is it's not a no fault scheme.
Contractors, subcontractors and consultants can be held liable and directors can even face personal liability.
And we can actually suspend and cancel licenses as well.
And if you if you also failed to pay the debt when it goes through a claim.
So probably the next slide just tells you a little bit about the different appeal pathways.
You can see a small percentage of our claims result in sort of our policies, 160,000 policies result in claims.
But for every dollar that it's paid out, we do seek recovery.
15% are then appealed internally and we'll go through our internal review period.
So again, more time added to that.
So the take away is this first resort, it strengthens consumer protection, but it will sharpen the spotlight on us in the industry and the consequences for ignoring or walking away from these defects can be quite serious.
So my tip is engage early, consider whether you have your own dispute resolution policy, rectify before things escalate.
Time is money and as time progresses, so does the value of our time.
Imagine that value in 10 year’s time and treat every claim as if you're licensed depends on it because it might.
This is some of the feedback up here that I mentioned from our surveys.
So from both of our sides of the claim, the builders and the consumers all have very positive things to say about engaging early through mediation and resolving those disputes.
But I do want to talk just quickly about some of the contracts changes that you'll see.
So deposits progress, payments will become more tightly regulated and insurance must be in place within 10 days of signing or before work starts.
This is the same requirement that we have in Queensland.
So I do want to share some insights.
We find many disputes start here right at the beginning with contracts.
Verbal variations rarely hold up scope misunderstandings.
They do drive a lot of our complaints.
So builders must tap, maintain rigorous documentation and clear communication.
So you can see here some of the key things from the slides from our consumers and I'm hoping that helps you to understand their perspective as well.
This is 1 dispute resolution journey map.
We have 10 because we are a one stop shop.
These are all on our website, but I guess I wanted to show you this to just to demonstrate how complex the journey is for consumers and that really it's incumbent on us to help and educate our consumers through the journey, put ourselves in their shoes.
One of the things I did want to highlight for any consumers or consumer groups in the room is our homeowner hub on our website, which is a tool that we've developed to help homeowners to understand.
So we talked just before I think Nicole, you mentioned about the, the fact that most licensee, sorry, most consumers don't know what they don't know.
So we've developed a pack we're hoping to distribute through banks to help our consumers through these very complex journeys.
In terms of the payment of your insurance premiums within 10 days, we actually see this is the most frequently reported offence from our consumers.
They're often aggrieved because if the policy isn't issued in time, they lose the opportunity to increase the insurance.
So this creates unnecessary disputes.
One of the common reasons our builders tell us that they pay the premiums late is because of their business and accounting practices.
So they batch all their payments on one day per month so that can push out the payment of the premiums.
So I guess my tip is simple and that is start preparing your systems and your compliance policies now so that you can pay these premiums on time.
And I've just got one example of an audit we did just to show you that it is quite systemic.
We had 100% failure rate and an and an almost 100% failure rate in 2 very big companies.
And so in general, these practices, they do undermine confidence in our system and we don't want that.
So please consider the reputational damage and get the systems in place now.
So I've just got a tip sheet right at the end.
In summary, my takeaways for you, resolve defects early.
I think we heard that quite a bit throughout the speech.
Managing expectations absolutely critical.
It leads to nearly all of our disputes, effectively engaging in disputes before they escalate.
Understanding your liability with the insurance scheme of first resort because it's going to be a very important one for you to understand, document everything and get your compliance systems right now.
So I leave you with one reflection at the end.
Which of the lessons today are you already applying and ready for?
And which ones are you going to take on now and go back and adopt tomorrow?
Thank you everyone and I look forward to answering your questions later.