Victorian taxpayers bail-out flammable builders

The property lobby has won again with Victorian taxpayers to spend $600 million for rectification workers to remove flammable cladding from the state’s high-rise buildings:

Victorian taxpayers will help fund major rectification works on buildings with dangerous combustible cladding, Premier Daniel Andrews says.

His Government has announced a $600 million package to fix hundreds of buildings with high-risk cladding.

Half will come straight from state coffers, and the other half will be raised over five years through changes to a building permit levy.

Mr Andrews announced the policy after receiving a report into the state of cladding in Victoria, which made 35 recommendations that his Labor Government is now considering.

Here’s more via The AFR:

A new body, Cladding Safety Victoria, will oversee the process, rather than the Victorian Building Authority building industry regulator…

Victoria has the largest number of known private buildings with them. Mr Wynne last month told a state parliamentary committee the number of affected buildings was more than 900…

Victoria’s move suggests other states will eventually follow in paying for rectification.

So, the dodgy builders that made out like bandits cutting corners and erecting thousands of sub-standard apartments will get away scot-free, leaving taxpayers to foot the bill.

This is another classic example of industry privatising the gains from development and socialising the costs.

Comments

  1. 600m could have bought quite a good chunk of a new hospital.

    But fck sick and injured people. Let’s give the money to apartment owners. Abahabahhahahaha

    • It would also pay for a chunk of a new prison which you could quickly fill with dodgy developers.

    • Apartment owners and developers pay large donations to political parties. They are more important than plebs who need hospitals who will vote for Andrews anyway.

    • Sometimes I think I’m too cynical, then I see stuff like this and realise. Hahahahahaha. I’m just a realist.

      • JunkyardMEMBER

        One man’s pessimism is another man’s realism I like to say. I used to have the goal in life of being the most cynical person alive, then I ran into Peachy on this blog and reaslsed I had no chance of getting that title.

      • Sure there’s a chance. You just need to quietly off me.

        I hear that African gangs (which don’t exist, of course) can do the job done for as little as $2k.

    • could of got rid of all those tin de-mountables in schools and still have some left over.

    • Its a defacto govt bail in for the banks more than the property developers
      (who phoenixed away in to another company long ago)

      Otherwise they would have to deal with negative equity on flammable apartments,
      and no apartment resales…

      • Well not just the banks, it’s a bail-out for the whole RE / FIRE industry.
        Without this shoddy apartments would be practically unsellable, who in their right mind would buy an apartment with known problems? Even bank foreclosure sales wouldn’t fix the problem and what would happen if half the apartments in a given apartment building were spec purchased by some developer. for next to nothing (that’s become the price that the rest would have to match) .
        No this is much bigger than just a bank bail-out it’s defacto governmental price support for the entire apartment sector….not forgetting all the commercial buildings that also have flammable cladding.

      • Thing is though, does anyone buy that this rectification work will fix the issues with these buildings? I mean even if Opal tower is fixed, as far as I’m concerned the whole darn thing is rotten to the core. To give an analogy both Fisho and I will understand, it don’t matter if you fix the engine on a car fi the whole damn chassis rotten and riddled with rust…

      • it’s worse than that Gav, We’re arguing about the quality of the paint job when the frame is rusted through and only held together by zip-ties. we both suspect that the engine is shot but it’s impossible to test because the wheels are missing.
        Something has to give….but that can’t happen now until the public purse is empty…such a shame!

      • Even StevenMEMBER

        You think the banks care about $600m? No… it’s a bailout of the construction sector pure and simple – developers, builders, architects, engineers, certifiers. Disgraceful.

  2. Terrible policy. Glad I am not a Victorian. Hopefully NSW doesn’t follow suit here. Developers aren’t allowed to donate so maybe I can live in hope.

  3. The real cost is likely to be in the billions, the ‘600’ is a political goldilocks number. It’s lucky we don’t have out of control growth corridors that need roads, hospitals and schools.

      • Its the kind of capitalism that capitalists like(and neo liberal governments). Mega profits, zero responsibility and when market conditions are not how they want them they use their pet government to sort it out, eg cheap labour imports. Any minor fk ups they just ignore the customer as they know they cant afford to take them to court and major catastrophes like the cladding and falling down buildings they load onto the public purse. Its time that company directors can be prosecuted in perpetuity and backdated to boot.

  4. I can’t believe how angry this makes me, seriously I think I hate this country now. lol..

    • I start to toy with the idea of leaving but going where? all of the western countries are now controlled by the same neoliberal mob.

      • Scandinavian Countries might be better..my sister seems to be happy in Botswana but you can’t own property as a foreigner there. How sad for locals. :).

      • Just on 40 years now since Regan and Thatcher started all this and each decade it gets a bit worse. The sickening thing is that both Aus/UK/USA have had the opportunity to correct much of this with the last iteration of a Labor/Democrats government but squandered it with a belief in the neo liberal economic nightmare while peeing around the edges with a bit of social policy.
        Currently in the UK and watching the brexit fiasco which is just another layer of neo libreral thinking, ie the brext Tory politicians are desperate for brexit to happen as it will take EU pressure of the city of London and its corrupt money laundering via its conduits to UK protected tax havens. This is much much bigger than the normal bod in the UK understands. It has been estimated that 99% of money ‘invested’ via the city to these places is black money and at best is purely tax evasion. Brexit is also about doing away with EU social policies in order implement even more austerity at the bottom and tax cuts at the top. There are no limits to the greed of the mega rich and big corps who control just about everything. So much for Trickle down.
        My cynical opinion is that we are heading for a fully fledged 3rd-world world regardless of where we are.

    • Mining BoganMEMBER

      Yep, this is no country for an honest, productive citizen.

      Burn the place to the ground. There is no good that can come from continuing on like this.

    • Don’t be upset – its racist.

      These apartments were bought by Chinese foreigners, mainly those who came here to exploit our health and education system with $5,000 placements at our primary schools after which they can bring in both parents and all grandparents (6 adults / child) all of whom can purchase these apartments.

      So a $600 million expenditure on the apartments of these Chinese foreign nations is only fair enough to ensure the are well kept as since they are empty with little contribution to the social amenity of cities like Melbourne they need to be maintained – and the state is in the best position to maintain private assets for wealthy foreign Chinese investors.

      Yeah sure primary Schools like Alphington or Fairfield which has seen their populations go from 200 students 10 years ago, upto 400 students as of today – and the announcement last month of an additional 200 more students next year tripling the school population in under 10 years should be grateful they have been told to limit the children access to the school yards at lunch time, they will be getting triple high rise portables, they are to utilise the hallways for classes and definitely NO BALL GAMES – should be grateful the money wasn’t “wasted” on more useless school building programs like last federal labor.

      I mean 5,000 new families in the space of 12 months will easily squeeze into these two schools……no problems.

      Also classes are to be held in Mandarin.

      PS

      Don’t be racist.

  5. St JacquesMEMBER

    The developers held a gun to Andrew’s head. Talk about the untouchables.This is going to cost billions. Victoria, once the second richest state, the industrial and scientific centre of Oz, is now increasingly resembling a third world ;society living on out of date pretensions. A world class sh*thole in the making.

    • SnappedUpSavvyMEMBER

      its the price paid for being the open borders snowflake over policed nut job state

      honestly everytime I travel to Vic I end up with a traffic or parking fine in the mail and no idea how I got it cos I was in traffic ALL DAY

    • The Chinese government might also have had some influence on Andrews. Their citizens own lots of VIC hi-rise apartments.

  6. Who knew we had 600 Million just lying around that could be used to stop developers from being financially accountable for cutting corners. I mean my suburb is full of developments that schools are overflowing, health facilities overburdened, pot holes in roads, trains too full for passengers to board, but the most important thing in this state seems to be ensuring that the top end of town aren’t impacted financially by their decisions.

    • I’m in Alphington / Fairfield – our primary school went from 200 students up to 400 students now – and was just told it will have another 200 students next year.

      We are told we will have split lunch times and classes in hallways – not even kidding.

      Papermill argument has been going on for years and they just said well – bad luck.

      Went to the Austin for a broken arm last week for my 5 year old kid – sat in there for 5 hours before seeing a doctor.

      Absolutely FCUKING disgusting. Seriously FCUKED.

  7. Hahahahhahahhahahahhahahahahhahahahahahahahahahhahahahahahahhahahahahahhahahahahahhahahahahhahahahahaha

    Dan and Xi must have had a great chat.

    One Brain One Response: Stimulate construction!

  8. Ronin8317MEMBER

    This has always been the expected outcome. Then again, it is a pittance compared to how much the state collected in terms of stamp duty, and if those flammable dog boxes become unsellable, it would hit the budget far more than 600 million.

    • You are assuming that this will only cost the government $600M. This is certain blow out to multiples of this value denying our kids of being educated in proper classrooms or enough hospital beds.

  9. Just remember who headed up the taskforce for the flammable cladding, yep, none other than Ted Baillieu. Was anyone really expecting a different outcome?

  10. michael francis

    Why can’t the government charge a ‘Rectification Levy’ on the rates notices and claw back the money that way.

    • Why should Joe and Jane Average pay? True, builders, developers, inspectors etc should be accountable, but Joe and Jane? The building permit levy applies on building value > $800k, so in this sense the funds are from the industry itself. Counter force is that this will further discourage construction of this type and is already falling.

  11. SnappedUpSavvyMEMBER

    if people are unhappy about it there may have to be some gender neutral football player or Islamic distraction drummed up quick

      • Yep, this happens regardless of who’s in power. The Victorian Cladding Taskforce, who recommended this, was headed up by former Liberal premier Ted Baillieu

        Why am I not surprised that a Baillieu recommended a bailout, considering they are one of Victoria’s largest land owners.

  12. This always was the most likely outcome.
    For those who are still wondering this is what a “Bali-in” Aussie style looks like.
    You’re taxes go to support Tradie jobs fixing the problems of the last boom and guarantee that everyone that did the right thing
    (As in everyone that purchased RE) gets bailed out by everyone that thought Houses/apartments were too expensive and s1ht quality.
    This always was the only possible outcome in Australia.

    • and we laugh and criticise China for building empty and dodgy apartments as way to stimulate their economy.

      • What really bugs me about this whole mess is the lectures that I’ve received whenever I suggested to a politician that they support some sort of R&D grant or even Tax policy. Trust me they (as in each and every damn one of them) is suddenly a hard core Austrian believing that there’s absolutely no place for a Government that’s trying to pick winners…let the Market decide.
        I’ve been lectured on just how out of touch I am with modern Industrial Policy by everyone from Little Johnny to Big Mal. Industry needs to stand on be able to stand on it’s own two feet…sink or swim ..pick your metaphor the answer was always the same, the lectures changed a little but not substantially.
        An now these bozos suddenly find they’ve got a lazy $1B (or maybe $2B) sitting around waiting for a good cause.

    • DominicMEMBER

      To be fair, none of the debt that’s being run up at either state or Federal level will ever be repaid so let’s stop pretending anyone cares. From here it’s “Forward!” (over the cliff)

  13. Wonder if a Petition could be started to prevent it? Get Up has to be useful for something after all.

  14. Ronin, this is not a pittance.

    Sure, the entire state expenditures are enormous (funded by stamp duties, in part), but the annual budget for new initiatives in 2019-20 was only $3.7 billion. Let that $600m figure sink in.

    • For context: the entire Education and Training sector received $546.6 million of output funding for 2019-20.

  15. Can I put in a work order to the state to fix my windows that weren’t put in properly? Perhaps fix the exterior painting that has come off only after a few years. Got some foundation issues that need fixing as well.
    Where do you draw the line? They are not even policing new building going up now for flammable cladding.

  16. Governments pick the winners. If you want to live in Australia you’d better get used to it.

  17. Dale SmithMEMBER

    Reminds me of an old political cartoon that showed a group of men in company uniform smashing and vandalising property. On the side of their van it said, ‘Govt. Work and Employment Creation Department.’

    Most of the companies that caused the mess will now also be paid to ‘fix’ it.

    It’s a great lark if you can get it.

  18. Of the effected buildings how many apartments do thedevelopers own. They caused the problem and they get their appartments fixed for free.

    • Mostly the cvnts running it. Someone should check Mr Wynnes net worth before and after establishing this new body.

  19. wasabinatorMEMBER

    Looking forward to a future of later funding:

    Wiring Safety Victoria
    Sinking Foundations Victoria
    Sponsor A Boomer Victoria

  20. Jevons ghostMEMBER

    From the New Internationalist in 2018
    **No more of your junk**

    Last year, China announced a ban on imports of ‘foreign garbage’. The result? Western stockpiles of used paper and plastic have reached crisis proportions. Adam Liebman explains why we need a less rosy notion of what actually happens to our recycling.

    https://newint.org/features/2018/11/01/chinese-waste-ban

    Maybe if we ask them nicely the Chinese will take pity on us and take back their shoddy cladding that Mr Andrews has removed from his Victorian highrise monstrosities. Then they can recycle it for re-use on theirs. Has to be a win-win.

    • The Traveling Wilbur

      Ummm…. considering the price of thermal coal and the flammability of the cladding selling it back to China isn’t unrealistic.

  21. This is an act motivated by fear. This pittance won’t stop the collapse in apartments

  22. Apartment sales must be plummeting and stamp duty receipts in the gutter. This feels like an attempt to boost confidence, but I think that boat has already sailed. Don’t think there will be too many who will be willing to jump in to live in a potentially dangerous apartment until it is fixed, so I think this is aimed at the investor market. Of this group there might be some who believe they can hold an apartment until it is fixed, as no-one knows which buildings are affected I think they will continue to wait things out.