In 2023, the Victorian Government announced a package of construction industry reforms aimed at protecting Victorians when they build or renovate their homes.

As part of these reforms, the Government has opened consultations into a review of the Domestic Building Contracts Act 1995.

The Act regulates home building contracts and provides various rules and statutory warranties that need to be followed by builders during construction.

The Act aims to protect consumers while meeting industry needs and keeping up with modern construction practices.

As Climateworks’ recent research in the Renovation Pathways program has demonstrated, energy efficiency upgrades to homes can play a key role in decarbonising the residential building sector.

Climateworks sees that the Victorian Government has a role to play in ensuring that energy efficiency works will lead to actual benefits and that any issues can be resolved as smoothly as possible.

Works that underperform against expectations could lead to consumer backlash against energy efficiency measures, resulting in lower uptake, while also impeding emissions reduction efforts. 

Until now, mandatory testing of energy efficiency upgrades (beyond basic checks) against relevant standards has not been included as a warranty provided by the Act.

At the same time, exceptions in the Act’s coverage means that upgrades to insulation and upgrades are not covered when they are undertaken on their own.

Recommendations

Climateworks recommends: 

• Building works undertaken to improve home energy efficiency should have a statutory warranty providing building owners with the ability to commission testing of energy efficiency works against existing minimum standards and energy rating tools and entitling the builder owner to rectification where compliance has not been achieved.
• Where domestic building work includes one or more works that improve the energy efficiency of an existing home, or that are undertaken during the construction of a home to meet energy efficiency requirements, domestic building contracts should include mandatory testing and inspection of energy efficiency works at inspection stages and completion of the work.
• The Domestic Building Contracts Regulations (the ‘Regulations’) 2017 r 7 be amended to remove the following single works from the list of building work to which the DBC Act does not apply when the works are undertaken to improve the energy efficiency of a home:
  • glazing 
  • insulating

Building work contracts can support climate action

Climateworks’ evidence shows that the building sector has a key role to play in achieving Australian and Victorian decarbonisation commitments.

Building consumer confidence to undertake the needed upgrades is a key challenge, and we encourage the Victorian Government to seize the opportunity by amending the Act accordingly.