Builders wined, dined by regulator
Richard Baker and Nick McKenzie
April 5, 2012
VICTORIA'S building industry watchdog faces a $3 million deficit blamed in part on exorbitant spending, including hiring corporate boxes at the football to entertain construction industry executives - the very people it is supposed to regulate.
The Age has learned that the Victorian Building Commission hired corporate boxes at nine AFL games last year and bought 18 Australian Open tennis tickets. Representatives of major building firms were among those invited to the events.
The commission's new head, Michael Kefford, discovered the agency was in dire financial trouble when he assumed the role in February and immediately began cancelling spending on entertainment, consultants, travel and external lawyers.
''The money going out of the place was astronomical,'' said a well-placed source.
The commission is the state agency that regulates construction standards and the building permit system for works ranging from home extensions to high-rise city towers.
Yesterday, The Age revealed up to 30 commission officials and consultants are being investigated for alleged corruption, misconduct and harassment.
Ombudsman George Brouwer is investigating allegations officials sought kickbacks from building practitioners in return for issuing building licences and stopping formal investigations into consumer complaints.
The revelation that the commission has been spending money entertaining building executives at sporting events could add to perceptions that it is too close to the industry, to the detriment of consumers.
A senior state government source last night said Planning Minister Matthew Guy became aware of the commission's heavy spending last year and directed Mr Kefford's predecessor, Tony Arnel, to monitor travel and entertainment costs.
The source said the government supported Mr Kefford's decision to cancel entertainment at sporting events, adding that it was not what was expected of a regulator.
Mr Kefford's spending cuts are believed to have improved the commission's financial outlook but a deficit is still likely this financial year. He did not respond to calls yesterday.
Mr Guy told The Age he was concerned by allegations of corruption and promised major reforms. ''There's no doubt we've got to reform the building commission and its structure so it can perform its key service of being a regulatory body for the building industry,'' he said.
Expected changes include a better complaints process and a restructure of four statutory boards - including the one responsible for disciplining builders - that are administered by, but not answerable to, the commissioner.
Auditor-General Des Pearson is expected to announce another audit into the state's building industry soon, in particular the consumer protection mechanisms within the Builders Warranty Insurance scheme.
Mr Arnel is facing pressure over the scandal. He resigned after 12 years as commissioner in January after a scathing report by Mr Pearson into the commission's performance.
Mr Arnel remains chairman of the not-for-profit group, the Green Building Council of Australia. Sources told The Age some board members wanted Mr Arnel to stand down until the investigations into the commission are concluded. A spokesman for the council declined to comment on the matter.
Mr Arnel, who also recently joined the board of the National Occupational Licensing Authority, did not return calls.
Housing Industry Association Victorian executive director Gil King said he was concerned the corruption allegations at the watchdog would have an unwarranted effect on public confidence in the wider building industry.
But Phil Dwyer, head of small builders group Builders Collective of Australia, called on the state government to launch a judicial inquiry into the commission and replace it with a body answerable to Parliament.
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