A New Building Regulator for Victoria

  

Reform of licensing, compliance, insurance and payments

  

 

 

Victoria in 1993 established the Building Control Commission, responsible for building regulation, the Building Practitioners Board to register and monitor practitioners conduct, and the Plumbing Industry Commission, responsible for licensing plumbers, drainers and gasfitters and plumbing work standards. In 2013 the Victorian Building Authority (VBA) replaced those regulators, becoming responsible for building standards, permits, surveyors, plumbers, contractors and subcontractors. In 2024, the Building Act was amended to make the State Building Surveyor a statutory position, to be the primary source of technical expertise for building and plumbing work.

 

In July 2025 the VBA became the Building and Plumbing Commission (BPC), with the Building Legislation Amendment (Buyer Protections) Bill 2025, as an integrated regulator that consolidated the functions of the VBA, Domestic Building Dispute Resolution Victoria and the Domestic Building Insurance arm of the Victorian Managed Insurance Authority. The goals are: 

·      To strengthen consumer protection through defect rectification orders and new insurance and bond schemes; 

·      To maintain standards in the building and plumbing industries through more effective regulation of builders and developers; 

·      To ensure consistency in compliance with the building code across the state; and streamline regulation with the BPC as the single point of contact.

 

The decision to replace the VBA with the BPC coincided with an October 2024 review by Weir Legal and Consulting Victorian Building Authority – The Case for Transformation. With seven detailed case studies, the review began by acknowledging ‘the dreadful experience these complainants have had in their interactions with the building industry, the VBA and the legal system.’  It found ‘the VBA management and culture failed consumers’, and builders were not made accountable for poor standards of work and unethical conduct. The VBA ‘failed to protect homeowners’ because of:

·      Ineffective regulation of practitioner conduct, weak enforcement and slow processes;

·      Consumer neglect with complaints that were lost, delayed, or ignored; and

·      Systemic regulatory failures such as combustible cladding and building defects in apartment towers [1].

 

This post first looks at the scope of the regulatory powers the BPC is given under the legislation and the changes from the system under the VBA, then the new domestic building insurance and apartment bond schemes are detailed. Issues with the legislation are discussed, including those raised by Master Builders Victoria, followed by the potential for issues with rectification orders and whether the BPC is responsible for providing technical solutions. Further reforms with a new domestic building contract and proposed changes to security of payment legislation are also discussed.  

 

 

Building and Plumbing Commission Powers

 

The BPC will oversee licensing, compliance, dispute resolution, and provide insurance coverage for defects. Current licenses will automatically transfer to the BPC and remain valid, but builders will need to meet minimum financial standards (that are not yet specified) to renew their licenses, have proof of insurance cover and provide a training plan for continuing professional development. There are new powers to combat phoenixing, where companies are liquidated to avoid debts and restarted under a new name. Builders who are directors of insolvent companies may face suspension or non-renewal of their licenses, with provisions for immediate suspension [2].

 

To protect homeowners, the BPC can order builders and developers to fix defective work for up to 10 years under Rectification Orders (ROs) that can be issued to whoever is responsible for carrying out the building work, including unregistered persons, subcontractors and owner-builders. The BPC can suspend licenses if builders fail to comply with ROs for defective work, which is a significant change. ROs can be issued to any class of building, including commercial buildings. Opportunities to rectify defects before an insurance claim is triggered start with the consumer resolving defects informally with the builder, and ending with the BPC issuing an RO. The viability of the scheme relies on the BPC compelling builders to rectify defects, reducing demand for insurance payouts.

 

For residential buildings of up to three storeys, Domestic Building Insurance (DBI) administered by the BPC will become insurance of ‘first resort’ and the BPC will set premiums. Homeowners have access to DBI in the form of ‘assistance’ when they suffer loss from incomplete, defective, or non-compliant work, in addition to the existing triggers for cover when a builder dies or becomes insolvent, disappears, or ignores a court order. Assistance will involve rectification or completion of the works or payment of compensation. The BPC can order builders to rectify defects, take disciplinary action against them, seek tenders for work, and recover amounts paid under DBI to fund repairs if the builder refuses. The new insurance scheme will start in July 2026, and may affect insurance premiums and underwriting conditions for builders. 

 

For residential buildings over three storeys, developers will be required to lodge a bond of 2% of the total build cost as security for covering the cost of fixing defects in common areas. Criticisms of the bond scheme are that it only covers common property, not private areas or structural defects, and doesn’t address issues related to faulty materials, design, or workmanship. For apartment buildings, ROs may be issued against builders and subcontractors, and also against developers. The BPC may withhold an Occupancy Permit if no bond is lodged or if serious defects are not fixed, and off-the-plan sales may be blocked. If an Occupancy Permit is issued without the developer having a bond, off the plan purchasers can rescind the contract. 

 

The developer bonds will be held by the BPC for two years after issue of an Occupancy Permit, and return to the developer if there are no outstanding defects. Recourse against or release of the bond will be subject to two reports from an independent assessor. A final inspection must be completed 21 to 24 months after occupancy, confirming defects have been rectified, otherwise the owners corporation can claim against the bond to fund rectification, with any unused portion returned to the developer. While the bond could be released 24 months after occupation, contested claims would take much longer.  Developers may apply to the Victorian Civil and Administrative Tribunal (VCAT) for review of a RO, and the BPC may apply to VCAT for an extension of time beyond the 10-year limit.

 

KCL Law posted: ‘these reforms mark a fundamental reset of Victoria’s residential construction sector. Consumer protection, professional accountability, and industry transparency are now front and centre, with significant implications for how developers, builders and regulators interact. But this is more than regulatory housekeeping, it’s a rebalancing of risk and responsibility across the entire supply chain. Builders are being asked to operate more like professionals than tradespeople. Developers must budget not just for construction but for compliance and regulators will no longer sit back and wait for failure before stepping in.’

 

 

Issues With the Legislation

 

There was a public consultation phase on the BPC. Although the submissions are not available online, the concerns they raised were widely reported. In particular, in May 2025 Master Builders Victoria (MBV) and Housing Industry Association (HIA) called for the Building Legislation Amendment (Buyer Protections) Bill to be subject to a review by a Parliamentary Committee, concerned that many provisions in the Bill increase costs for builders, unfairly penalise good builders, and would not do much to protect consumers from bad building practices. 

 

In a June post the MBV’s key concerns with the Bill were: 

·       ROs can be issued to both builders and developers, but only registered builders face the risk of losing their registration if they don’t comply. Developers, who are not required to be registered, face no equivalent consequences; 

·       The Bill places the entire burden of rectification on the builder, even when the defect is determined to be caused by another party, such as the designer; 

·       The home building sector is already seeing a decline in builder numbers due to frustration with an increasingly complex and biased regulatory environment; 

·       The definitions of ‘Defect’ and ‘Serious Defect’ are too broad. ROs should be limited to serious defects only, and if ROs apply to all defects a genuine appeal process must be provided for the builder.  

 

There are valid concerns here. In particular, has the ‘burden of rectification’ been placed solely on the builder, when other parties such as designers or engineers may be at fault? The legislation does not define how disputes over proportionate liability will be managed. Also, the broad definition of a serious defect may become problematic, and when combined with the lack of clear guidelines on liability, disputes may be more complex, protracted, and difficult to resolve. That said, the legislation does not prevent the builder chasing other parties who are at fault, and the builder and developer have responsibility to resolve a dispute and compensate for rectification.

 

The Victorian HIA compiles data on building registrations from the VBA annual reports. Their chart shows the number of registered domestic builders by company and by individual. The number of individuals registered as domestic builders has declined from a 2020-21 high of 17,545 to 16,669 in 2024-25, but the number of companys registered as domestic builders had a small increase. The number of finalised applications for building practitioner registration has also declined, from 2,821 in 2020-21 to 1,384 in 2024-25. These trends predate the transition of the VBA to the BPC, and not evidence of builders leaving the industry because of onerous or bad regulation. 

 

Figure 1. VBA data

Source: HIA

 

The 2024-25 VBA annual report’s table 4 with building and plumbing registration and licensing has more detail. Figure 2 shows that, between 2023-24 and 2024-25, there have been increases in the number of people registered as surveyors, inspectors and domestic project managers, and over 1,100 more licensed plumbers. The annual report says ‘the 18.7 per cent increase in the number of building surveyors registered is attributed to practitioners attaining registration through the mutual recognition pathway’, however The Age newspaper revealed 60% (123 out of 204) of new Victorian building surveyor registrations in 2024-25 through mutual recognition from Western Australia, where the qualification standards are lower and a bachelors degree is not required. There were also 4,936 engineer endorsements (for engineering wanting to work in building construction) were a four per cent increase over 2023-24.

 

Figure 2. Building and plumbing registration and licensing 

Source: 2024-25 VBA annual report, p. 40 [3].

 

 

A petition to the Legislative Council (from an unknown group called vicbuildersunite with only 300 signatures) also called for a review of the legislation, because it would ‘result in an anti-competitive situation through the creation of a government-controlled insurance monopoly.’ The petition then argued: ‘There is a lack of procedures to resolve disputes between builders and subcontractors whenever a disputes occurs over works which increases costs to consumers, a lack of accountability from third party building inspectors both private and regulated, a lack of transparency and fairness in how the regulator investigates practitioners and unfair costs associated with accessing building standards and technical information which includes the limited hours the regulators technical team are available.’ There are more like complaints than criticisms, and to suggest ‘a lack of transparency and fairness’ in a scheme that has not yet started is ridiculous. 

 

There are a few other issues that have been raised that should not take too long to be resolved: 

·      There is a lack of clarity on transition arrangements for projects already underway or with pre-existing contracts and how they are affected by the new bond requirements;

·      A RO may allow penalties based on single complaint without a thorough investigation; and

·      The minimum financial standards for builders have not been specified.

 

 

Issues with ROs and the Condensation Scenario

 

There are potentially issues with how ROs will be managed. The Explanatory Memorandum for the legislation says:

 

‘New section 75E sets out what a rectification order can require a person to do.  Subsection (1) provides that the person may be required to take any action or the action specified in the order to complete the building work, rectify the non‑compliant or defective building work, rectify any consequential damage associated with the building work or the defective or non‑compliant work, follow any directions or meet any standards in completing or rectifying the work or do any other thing in connection with the required completion or rectification activities.’

 

‘New section 75H specifies what information a rectification order must contain.  This includes a statement describing the action the person to whom the order is issued must (or must not) take for the purposes of the order, a statement describing any standards that must be met or directions the person must follow, a statement describing any other things the person must do for the purposes of the order, the date by which the order must be complied and any prescribed information.’

 

Tim Law, an architectural scientist specialising in mould in buildings, worries Victoria’s legislation expects the BPC to fix every problem it uncovers and the State Building Surveyor (SBS), as the designated technical authority, to provide solutions. The result could be the BPC becoming both enforcer and scapegoat, responsible not just for identifying defects, but for solving problems and inheriting liability for every systemic failure in Victoria's building industry over the past decade. If this is right, it will become a very expensive problem for the BPC as the costs for defect remediation will be carried by DBI, and the BPC will have financial responsibility for outcomes they cannot control. However, if the BPC follows the NSW example, it will issue ROs that define the problem for the builder to get advice on how to fix, and then show the BPC that they have done the work. 

 

 

Reform of Contract and Payment Legislation

 

In September 2025, the Domestic Building Contracts Amendment Bill 2025 (Vic) was passed by the Victorian Parliament and will take effect by or before December 2026, and will apply to domestic building contracts entered into after the commencement date. The BPC will take over the protection functions of Consumer Affairs Victoria, which posted the new laws will: 

·       Provide stronger protections for homeowners when signing domestic building contracts;

·       Set clear rules on when builders get paid. Deposit limits, progress payment stages, and progress payment limits can be set in regulations. Any payments for completed work will be subject to a proportionality requirement;

·       Allow the use of cost escalation clauses for contracts worth $1 million or more. But these clauses can only add up to 5% to a contract’s price, and extra consumer protections will also apply;

·       Separate preliminary agreements. Builders and clients can make their own agreements for developing plans, specifications and bills of quantity;

·       Ensure clearer contract requirements for all. Currently, some basic document requirements only apply to major domestic building contracts. These will now apply to all domestic building contracts;

·       Provide a single, simple process for contract variations for major domestic building contracts. This applies whether the homeowner or the builder requests a variation; and

·       Set stronger rights for homeowners to end a major domestic building contract. This will make it easier to walk away if needed.

 

The new contract has mandatory pre-contract disclosures, tighter variation controls, and new rules on progress payments and deposit limits. It recognises the role of modern methods of construction by linking progress payments to the actual proportion of building work done, which affects financing of modular and prefabricated construction. This important reform means prefabricated houses in Victoria will have their own framework for staged payments. New rules around fixed-price contracts reduce reliance on provisional sums and prime cost items. (See here and here).

 

Along with the Domestic Building Contract Act the Government is also improving security of payment (SOP) to reduce insolvency risk and protect smaller contractors, subcontractors, and suppliers. In September 2025 the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Bill was made public. This is the first package of reforms from a 2023 Parliamentary Inquiry into SOP, and is based on 16 of the 28 Inquiry recommendations. Industry consultations are underway on a second set of SOP reforms. (See here, here, and here). The security of payment bill will align Victoria with other states by removing excluded amounts, which were unique to Victoria, and  unfair payment clauses, and make the enforcement of payments simpler. It will be easier to make claims and have them adjudicated if there’s a dispute.

 

Other reforms under consideration are a handover manual for completed buildings on their construction and maintenance. Building surveyors will be required to provide an information statement to the owner of the building or land within 10 working days of issuing a building permit. A Building Monitor as a dedicated advocate for Victorian domestic building consumers exists, but has not yet been funded. New categories to be considered for registration requirements are building consultants and site supervisors. Changes to approvals, registration and licencing, inspections and insurance requirements to promote modern methods of construction are being developed. An expert panel is advising on a rewrite of the Building Act. Further reforms could be increased mandatory inspections during construction, and introduction of 10 year defect liability insurance similar to the scheme in NSW. Statutory trusts for retention money as in Queensland are not proposed [4]. 

 

 

Conclusion

 

The Victorian Government wants higher accountability, lower defect rates, and faster dispute resolution in the construction industry, particularly for residential building. After a damming review highlighted the failings of the Victorian Building Authority a new regulator, the Building and Plumbing Commission, was established in mid-2025 with greater powers to address defects and management of new insurance and bond schemes to pay for rectification.

 

With the BPC able to issue Rectification Orders up to 10 years post-completion there is now a long period of liability for builders and developers, who will need to keep records of completed and disputed defects. There will be new, as yet unspecified, minimum financial standards for builders, and measures to prevent phoenixing of companies. The BPC will manage domestic building insurance and a developer bond scheme for apartments over three stories. The BPC can withhold an Occupancy Permit if no bond is lodged or if serious defects are not fixed, and off-the-plan sales may be blocked. If an Occupancy Permit is issued without the developer having a bond, off the plan purchasers can rescind the contract. As with any ambitious regulatory reform there are critics, and the relevance and accuracy of their arguments will be found over time. 

 

There are some potential problems for the BPC. How the transition for projects already underway or with pre-existing contracts that are affected by the new bond requirements will be managed is unclear. The ‘burden of rectification’ of defects is on the builder, although designers or engineers may be at fault, and the legislation does not define how proportionate liability will be managed. The definition of a serious defect is broad, and with the lack of clear guidelines on liability, disputes may be more difficult to resolve. The developer bond only applies to defects in common areas, not substandard work or faulty materials. However, the new insurance scheme should incentivise builders to rectify building defects as they are found by homeowners, preventing disputes.

 

In conjunction with the BPC legislation, there is a new Domestic Building Contract Act and new security of payment measures. The new contract has stronger protections for homeowners, tighter variation controls, and links progress payments to work done in a framework for modern methods of construction. A new security of payment bill will align Victoria with other states by removing excluded amounts. 

 

The concern of industry associations is that regulatory complexity, the cost of insurance and bonds, and minimum financial requirements, will result in builders leaving the industry, particularly smaller ones with limited capital, and reduce industry capacity. Residential building has always had high rates of entry and exit, because it is a cyclical industry with many small and medium size businesses. However, it would be difficult to know which exits are due to the new regulatory system, instead of industry conditions, retirement, or insolvency. 

 

The Weir Review of the VBA made 20 recommendations. Those on dispute resolution, phoenixing, domestic building insurance, inspections, occupancy permits and rectification orders have largely been adopted. Some like staged building permits, codes of conduct and training for builders and surveyors, and for BPC staff, are for the BPC to implement. The recommendations for declared designs, including plumbing designs, to be lodged on a government portal, as in the NSWDesign and Building Practitioners Act 2020, are not in the legislation, despite their importance in the NSW reform strategy [5].

 

Taken together, these reforms are a comprehensive upgrade of the construction industry’s regulatory framework in Victoria, particularly in the residential building sector. Consumer protection and builder accountability have been the focus, and the changes to risk and responsibility for compliance will affect all participants. For consumers the insurance scheme is a crucial change, because the builder does not have to be insolvent or disappeared to make a claim it makes insurance genuinely protective, and should lead to better quality of work. For contractors and subcontractors, an important change is the removal of excluded amounts in the new security of payment bill, and they can now claim for contested variations and costs through a simpler adjudication process. The BPC consolidates several regulatory bodies, has expanded powers, and is expected to be a more effective and proactive regulator than its failed predecessor. 

 

                                                               *

 

Acknowledgement: I’d like to thank David Chandler, Bronwyn Weir and Tim Law for their comments and assistance in preparing this post. Any mistakes or errors are mine.  

 

 

 [1] Flammable cladding in Australia and the second Grenfell Report were covered in this post.

[2] Insolvencies and entry and exit data were discussed in this post.

[3] The 2024-25 VBA annual report can be downloaded from

https://www.parliament.vic.gov.au/parliamentary-activity/tabled-documents/

[4] The Queensland statutory trust account systems was covered in this post. Regulation under the Queensland Building and Construction Commission will be the subject of a post in the near future. 

[5] The NSW reform strategy was outlined in this post.

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Queensland Report on Construction Productivity

 More recommendations and reform directions focused on regulation and planning

 

 

The Queensland Productivity Commission (QPC) released their interim report on Opportunities to Improve Productivity of the Construction Industry on 31^st July. Construction productivity has recently been the subject of two other reports, with this one following the NSW Productivity and Equality Commission report Housing Supply Challenges and Policy Options in August 2024 and the Productivity Commission report Housing Construction Productivity: Can We Fix It? in February 2025. 

 

The motivating force behind the three reports is a political requirement to be seen to be doing something to address the housing crisis, which is fundamentally due to a mismatch between a long-term lack of supply of new dwellings and the high level of demand, driven by a combination of increased immigration and decreased household size. The result has been rising house prices, falling affordability, particularly for first home buyers, increased rents and very low vacancy rates. Another factor is the high level of engineering construction, due to the size and number of transport and energy projects, many of which are for the public sector. Queensland also has the effects of additional demand from the 2032 Olympic Games projects, currently estimated at $7 billion (which based on other Olympic Games will be much more).

 

The QPC report says ‘While many problems were identified, stakeholders were generally confident that better outcomes are possible. There is broad agreement amongst stakeholders, for many of the solutions identified, on how to address the problems facing the industry.’ Unfortunately, some 342 pages later, most of the problems discussed are about regulation and planning, onsite construction productivity barely gets a mention, there is no evidence stakeholders are in agreement on solutions and more information is requested for the recommendations, and how the problems will be addressed is not included because ‘Implementation issues, including prioritisation and sequencing, are not considered in this interim report but will be considered in the final report.’

 

This post starts with the QPC interim report’s terms of reference and Queensland construction productivity, then looks at the recommendations and reform directions in the report. Some of the report’s  key points on planning and approvals and regulation are covered, and other important industry issues and opportunities not addressed in the report are discussed. 

 

The Terms of Reference Were Extremely Broad

 

To understand how complex the issues surrounding  construction productivity are and why this report (and the others) are so unsatisfactory it is necessary to start with the terms of reference given to the QPC (heavily edited to key points) :

 

•        Conditions in Queensland’s housing market, residential development, and non-residential construction, including housing supply and affordability;

•        Key trends including input costs, prices, competition, and supply chain developments;

•        Factors shaping Queensland’s productivity including legislation and regulation, industrial relations, procurement policies and labour force needs;

•        Opportunities for improvement including regulatory and non-regulatory mechanisms;

•        Priority areas for reform in the short, medium and long term (including labour, skills and competition, suitability and availability of qualified head contractors and sub-contractors etc.);

•        Impact on small and medium scale subcontractors in regional areas and their ability to compete for government tenders due to regulatory requirements;

•        Availability of labour, skills development, and matching supply with demand;

•        How government procurement and contracting arrangements affect construction productivity, including Best Practice Industry Conditions (BPICs are wages and conditions on public projects introduced to encourage enlistment of workers);

•        Barriers to entry, investment and innovation in the sector.

 

Including issues around government procurement and contracting allowed the QPC to address some important productivity determinants that were not in the other recent reports. However, the problem is the breadth of these terms of reference, and the loose or long-term relationship many of the others have with onsite construction productivity, which is what is being measured by the statistics. 

 

The QPC report, and the NSW and Productivity Commission reports that preceded it, are not really about construction productivity, which is being used as a stalking horse for the long-term lack of supply of new housing. These reports are more concerned with the complex, cumbersome and sclerotic planning and approvals process that deters, delays and prevents residential construction, and the effects of regulation and the building code.

 

Queensland Construction Productivity

 

The QPC found Queensland construction productivity is only 5 per cent higher than it was in 1994-95, compared to a 65 per cent increase in labour productivity in the market economy. As Figure 1 shows, the variation in aggregate productivity is explained by compositional changes due to the rapid growth and subsequent decline in heavy and civil engineering activity in the LNG investment boom.

 

Figure 1. Queensland productivity

 

This is also what a previous post on construction productivity in the states and territories found. In 2014 the Australian mining boom peaked with the value of work done reaching $80 billion in Queensland, mainly due to construction of three LNG plants. The pro-cyclical nature of construction productivity is clearly seen in Figure 2 as gross value added (GVA) per hour worked followed the fall in the volume of work, which declined by around 30 percent in Queensland [1].

 

Figure 2. Gross value added per hour worked and construction work done

Sources: ABS 5220, ABS 6150, ABS 8755.

 

The quotes below on the causes of slow productivity growth have been taken from the QPC report.

 

‘Although empirical evidence on the causes of slow productivity growth is incomplete, it suggests that regulation is likely to have played a key role’:

·      Evidence from the United States and New Zealand suggests restrictive land use regulation may have made it more difficult and expensive to construct housing and other buildings [2].

·      Research suggests there have been significant increases in the complexity of building regulation, which has increased overheads and construction costs.

·      Regulatory design, including regional variations, have created incentives that keep the industry fragmented and dominated by smaller firms, who are less likely to innovate and have lower productivity.

·      Where regulators have poor incentives or are underfunded, results in unnecessary delays, high administrative costs and poor oversight, which can undermine productivity.

 

‘Recent changes to the National Construction Code (NCC) have been adopted without a case being established that they would provide a net benefit to the community. Similarly, Queensland introduced its trust accounts framework without undertaking a regulatory impact assessment.’

 

‘While regulatory issues seem to be a key driver of poor performance over longer time periods, more recent productivity declines seem to have been materially impacted by policy choices relating to Queensland Government procurement.’ 

 

‘Insufficient attention has been given to how procurement practices or new projects are impacting the market. This has been exacerbated by poor project selection.’

 

‘Government procurement practices, particularly BPICs, have created unnecessary inefficiencies’

 

The Report’s Recommendations and Reform Directions

 

The preliminary recommendations are ‘specific reforms that the Commission is seeking feedback on.’ There are 21 recommendations, of which six are on planning and approvals, and four on the NCC and regulation. The recommendations are:  

 

·     Government procurement - recommendations 1, 2 and 3;

·     BPICs removal –  recommendation 4;

·     Planning and approvals – recommendations 5, 6 (infrastructure charges), 7, 8, 9, and 10;

·     Regulation –  recommendations 11 (NCC), 12 (building codes), 13 (minimum financial requirements), and 14 (trust accounts);

·     Modern methods of construction (MMC) – recommendation 15;

·     Worker health and safety – recommendations 16 and 17;

·     Workforce – recommendations 18 and 19 (occupational licensing), and 20 (mobility);

·     Utility connections - recommendation 21.

 

The reform directions are ‘areas where there is a clear case for action, but the Commission is seeking further information to support the development of specific recommendations.’ There are 12 reform directions, of which

 

·    Government selection and staging of infrastructure – reform direction 1;

·    The pre-qualification system – reform direction 2;

·    Re-setting industry practices and increasing competition – reform direction 3;

·    Tendering and contracting, including building information modelling (BIM) and collaborative contracts - reform direction 4;

·    Planning and zoning reform – reform directions 5, 6 (community support);

·    Review of regulations – reform directions 7 and 8 (QBCC);

·    Worker health and safety - reform direction 9;

·    Workforce - reform directions 10 (training), 11 (migration), 12 (labour hire).

 

There are also two requests for information, on the 2024 Energy Queensland Union Collective Agreement, and on foreign investor taxes and housing construction. 

 

If the aim really is to improve construction productivity, recommendations would be focused on improving project management, logistics and supply chain efficiency, increasing investment in machinery, equipment and software, contractual relations and the structure of the industry. While the recommendations on procurement are important, and with those on workforce development and industrial relations relevant to productivity, the majority of the QPC’s recommendations are on legislation, regulation, and the planning and approvals process. 

 

A comparison with the 2024 NSW Productivity and Equality Commission report Review of Housing Supply Challenges and Policy Options for NSW is useful. That report found barriers to housing supply included high construction and borrowing costs, capacity constraints in the construction sector, and bottlenecks in the development process, with over half of the 32 recommendations on planning. It recommended reforming planning to streamline the development process and reduce approval times, and reviewing planning policy because ‘prescriptive rules’ on land block innovation. Other recommendations included education and skills, business regulations and tax, improving infrastructure and transport, replacing stamp duty with a land tax, establishing an Urban Development Program to report on the housing market and a housing supply council to advise on housing targets, and incentives for local government to meet targets. It argued for non-regulatory approaches wherever possible, and avoiding excessive regulation. While there are many overlapping recommendations, this is a more ambitious agenda than the one envisaged by the QPC. 

 

The structure of the QPC Interim  Report echoes the Productivity Commission’s February report, which had five issues and seven reform directions. The PC’s issues were: the complex and slow approvals process; fragmentation due to regulation; the lack of innovation; the regulatory burden; and workforce issues. The reform directions were: coordinated and transparent planning approvals and appropriately funded regulators; review building regulations and the NCC’s objectives; implement ratings systems on new and existing building quality; increase diffusion of technology; public research and development funding; reduce regulatory impediments to MCC; and improve workforce mobility and flexibility. The PC suggested states should consider establishing coordination bodies to speed up the process and address delays such as the Queensland State Assessment and Referral Agency, which got two mentions but no discussion in the QPC report [3]. 

 

The Planner Productivity Problem

 

Over 45 pages the QPC details regulation of land use that ‘can be complex, restrictive, inconsistent across local governments, inconsistent between regulatory instruments and impose costly and unnecessary requirements’, a planning system that ‘is complex, difficult to navigate, inefficient and lacks transparency and accountability’, and approvals processes that ‘create uncertainty, have high transaction costs, require expensive or unnecessary modifications to building design or cause excessive delays.’ 

 

The QPC recommends an alternative development pathway for significant developments [4], amending the Planning Regulation, and reviewing the Building and Planning Acts. The Government should ‘investigate digital planning and permitting technologies to improve the efficiency, accuracy and transparency of the approval process.’ To ‘build community support for housing development’ the QPC suggests improved consultation, citizen panels, independent hearing panels, and negotiable conditions. To improve zoning financial incentives for local government might be used. 

 

It is universally recognised that the time and cost of development approvals is a problem, but that is an issue of planner productivity not construction productivity. Research from YIMBY Melbourne found ‘In 1986, for every practicing planner, Australia built around 54 homes. Now, we build fewer than nine homes per planner. A planner 40 years ago was on average responsible for the development of six times the number of homes per year than a planner working today.’ 

 

Figure 3. Planner productivity

Source: There is no planner supply shortage, YIMBY Melbourne Research Note. 

 

The Research Note concluded ‘The demand for planners has mainly increased not through an increase in construction output and project delivery, but through an increase in regulatory process and complexity.’ This is QPC’s reform direction 4, and addresses 

the problem that development projects such as new housing estates and apartment complexes can take ten years or more to complete, with most of the time spent getting approvals. 

 

Regulation and the NCC

 

The QPC says ‘evidence suggests that several regulations affecting the construction industry are not effective or efficient, and are likely to be reducing productivity. Building regulations are becoming more complex with increased risk they are impeding productivity. Reduced levels of attention are being paid to the costs of new regulation, with regulatory best practice not being followed.’

 

Figure 4. The Queensland building regulation system

 

 

The outcome is the QPC’s view that recent changes to NCC 2022 for liveable housing and energy efficiency have increased construction costs, and ‘regulatory impact analysis undertaken showed these benefits were unlikely to justify the costs they impose.’ The recommendation is for Queensland to opt out of NCC 2022 and ‘only adopt future NCC changes in Queensland codes where these have been through robust regulatory impact analysis to demonstrate they provide net benefits to the community.’ 

Under Reform direction 8 ‘consideration should be given to whether the regulatory framework underpinning the QBCC provides the right incentives for ongoing

improvements to regulatory performance.’

 

Modern Methods of Construction and BIM

 

There is a short chapter in the interim report on MMC, included in the section on regulation. The QPC argues there is no market failure and no reason for government intervention to promote MMC. The report makes some general observations about regulatory barriers to MMC, none of which are new, and did not endorse MMC as an alternative to conventional building. There is no discussion on the cyclical boom-bust nature of residential building, which makes industrialisation of modular and prefabricated housing difficult, the reluctance of most banks to finance modular and prefabricated houses, and the lack of standards or an industry quality assurance accreditation system for modular and prefabricated buildings. 

 

The QPC acknowledges the existence of the MMC program that QBuild and the Office of the Queensland Government Architect have, which is a partnership with 12 industry suppliers to supply housing in regional and remote areas. In 2023 QBuild established a training and production facility at Eagle Farm in Brisbane, and two more production facilities have since opened in Zillmere in north Brisbane, and Cairns in Far North Queensland. 

 

Although QBuild has the best developed MMC program in Australia that has produced over 500 houses, the QPC does not discuss or make any recommendation on the program. The QPC did not use the opportunity to report data from QBuild on MMC productivity, costs and time performance, or provide feedback from occupants on the build quality and  liveability of their houses, or from users of modular or prefabricated public buildings like schools and hospitals. 

 

Another oversight is the lack of discussion on the use of Building Information Modelling (BIM) or other digital tools like design for manufacture and assembly (DfMA). These are making offsite manufacturing of building modules and components more efficient and have been used for over a decade. At the end of the section on Contracting for Efficiency the QPC asks for information on ‘the key barriers to increased adoption of digital technologies, such as BIM, and the policies or practices that would allow the opportunities for digital technologies to be fully leveraged.’

 

Queensland has had a BIM mandate for public projects over $50 million since 2019, however the QPC does not think this worth mentioning or, worse, investigating. This was another missed opportunity to assess the costs and benefits of their BIM mandate, and the failure to recommend its retention and/or extension a mystery. Also, the BIM mandate is under the Queensland Department of State Development and Infrastructure, which has a 2024 Infrastructure and Workforce Productivity Plan with details on current and planned initiatives, The QPC does not refer to this plan or its effectiveness [5]. 

 

Industry Issues

 

There are other important industry issues not discussed, starting with construction costs and the volatility of the building cycle. Improving productivity through better project management and reform of the VET system are also overlooked. There is no discussion of digitisation and automation, digital tools and platforms, AI enhanced systems, and automated planning and code compliance checks. Also, industry contractual relationships and risk allocation are not considered. Subcontracting is flexible and a method to manage costs and risk, but direct employment has a smaller span of control and is more efficient. 

 

Although there is extensive coverage of building regulation and the NCC, the QPC does not discuss building defects and the lack of implementation of the 2018 report Building Confidence: Improving the Effectiveness of Compliance and Enforcement Systems for the Building and Construction Industry Across Australia recommendations on mandatory inspections and fire safety. Nor is the problem of flammable cladding in Queensland in the report, where from 2019 to 2023 there was a Safer Buildings Taskforce to advise the government on policies and actions and how to rectify combustible cladding. In August 2025 three public buildings still needed rectification and some unknown number have been rectified and removed from the online list on The Department of Housing and Public Works page, which says: ‘As of 31 May 2024:

·       976 private buildings require a solution to address cladding risk;

·       308 are potentially at risk and need to complete the checklist process;

·       345 have notified of removal or rectification.

 

Although the terms of reference were to look at other jurisdictions, there is no discussion of the NSW iCIRTsystem, developed by ratings agency Equifax, for assessing contractor and consultant capability and performance, despite clear evidence of the effectiveness of the system in NSW in improving building quality and addressing the problems of building defects and phoenixing by developers and contractors. Discussion of the 10 year latent defects insurance scheme that has started in NSW is also missing. 

 

Conclusion

 

The QPC has focused on regulation and planning as the main issues, but these are just two of the factors that affect onsite productivity, and arguably skills, technology and project management are more important. Also, while no-one disputes the importance of issues like costs, prices, competition, the supply chain, labour, skills, occupational licensing, procurement and contracting, these have been discussed and dissected over and over again. The QPC makes no new contribution to these issues.

 

The QPC’s 21 recommendations and seven reform directions are in four key areas. The first is improving government procurement policies, where well-known ideas on collaborative contracting, and selecting, sequencing, and sizing of public projects are recycled. These would all make the Queensland Government a better client and would probably increase productivity on public projects, but that can only have a small effect on the overall level of construction productivity in the state because most of the work done is for the private sector. The Queensland Government (and the other Australian Governments) have received these recommendations many times over the years. 

 

The second key area is improving land use regulations, including approvals and zoning, which are a third of the recommendations. The QPC does not directly address the reality that local government opposes new housing, although it does recommend an alternative development pathway for significant developments and reviewing the Building and Planning Acts. The issue here is planner productivity, which has fallen as regulatory complexity has increased, not construction productivity. Planning and zoning decisions have no effect on supply side issues such as the cost of construction materials and mortgage finance for new housing, providing the infrastructure needed for new developments, and the rate of conversion of approvals into commencements by developers.

 

The third key area is the regulation of building activity. The QPC recommends opting out of the 2022 NCC updates on building accessibility and thermal performance because of their cost effects, reviewing the regulatory framework and performance of the QBCC, and pausing rollout of trust accounts while investigating their costs and benefits. The QPC argues no government support for MMC is required, but regulatory barriers should be addressed. 

 

The fourth key area is improving labour market operation, mainly through reform of apprenticeship and training pathways, occupational licencing, skilled overseas migration, labour hire licensing, and allowing recognition of qualifications from interstate. These issues were recognised and had similar recommendations in the NSW and Productivity Commission reports. 

 

What the QPC report shows is that construction productivity in general, and residential productivity in particular, is being used as a stalking horse for the lack of supply of new housing. As in the previous reports from the NSW Productivity and Equality Commission and the Productivity Commission, the main focus is on a sclerotic planning and approvals process that delays and often prevents new housing. The real issue there is local government opposition to new housing and planner productivity, not construction productivity. 

 

Houses are larger and apartments smaller than a few decades ago, but how they are procured and built, and what they are made of, has not substantially changed in decades. Fundamentally, that is also why the level of productivity has not changed. While there are more electrical appliances and offsite manufacturing of trusses, windows, doors and cabinetry, the building structure and services like electricity, water and plumbing in a 1960s dwelling are those found in a new build today.

 

Construction in general and housing in particular has a well-established system of production that is efficient and flexible. It will only change if and when there is a clearly superior method of delivery that is also profitable. Tinkering with regulations, the NCC, planning and approvals processes, and occupational licensing might make a difference at the margin, but will not deliver the big improvement in productivity that is required. For that a commitment to increased digitisation and automation is necessary, with government policies, procurement and finance aligned. 

 

There are some glaring omissions in the report. The QBuild MMC has produced over 500 houses, but the QPC does not discuss or make any recommendation on the program. Queensland has had a BIM mandate for public projects over $50 million since 2019, however the QPC does not think this worth mentioning or, worse, investigating. There is almost no discussion on the use of BIM or other digital tools like design for manufacture and assembly. Construction costs and the volatility of the building cycle, improving productivity through better project management and reform of the VET system are also overlooked. Although there is extensive coverage of building regulation and the NCC, the QPC does not discuss building defects and the lack of implementation of the 2018 Building Confidence report. 

 

The productivity issues in the QPC report are not new and can be found in many other reports on the industry, although there are some that are specific to Queensland. The interim report’s recommendations are limited and most would be little more than modifications to the current system. While those may be worthwhile, because the current system can clearly be improved, there is no suggestion that a more radical approach might be needed or taken.

 

                                                            *

 

[1] The effect of the mining boom was the subject of a 2023 post on The Long Cycle in Australian Construction Productivity using GVA per person employed.

 

[2] The US research was discussed in an October 2024 post Recent Research on Construction Productivity.

 

[3] Discussed in the post Housing Productivity Report a Missed Opportunity on the  Productivity Commission’s report Housing Construction Productivity: Can We Fix It? 

 

[4] The QPC does not refer to the NSW Housing Development Authority, established in January 2025 to approve State Significant Developments and rezonings. By August it had approved 187 projects with over 70,000 dwellings. NSW has introduced a Pattern Book of six low and mid-rise housing designs with a 10 day approval pathway. Also in August, Victoria introduced a Single Home Code for deemed-to-satisfy houses that need no further approvals. This follows the Townhouse and Low-Rise Code introduced earlier in 2025.

 

[5] A 2021post was on BIM Mandates and  Construction Industry Policy

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