QBCC Governance Review Report released – key recommendations examined

Overview

The QBCC Governance Review 2022 report (Report) authored by Jim Varghese AM was released on 29 June 2022, along with the Queensland Government’s response (Response).

The Review contains 17 recommendations (and 77 actions) which are stated to address the gap between where the Queensland Building and Construction Commission (QBCC) is now and where it aspires to be as an outcomes-focused statutory agency.[1]

The more notable recommendations include:

• transferring the administration of the Queensland Home Warranty Scheme (QHWS) to another government department (such as Treasury), so that the QBCC can focus on contractor licensing and compliance;
• establishing an independent dispute resolution unit (comprising the functions of the adjudication registry, internal review unit and resolution services) within the QBCC that is quarantined from other QBCC officers and the QBCC’s licensing operations;
• promoting its transition to an insights-driven and outcomes-focused regulator through transformational roadshows, presentations at industry events, and engagement with peak organisations and stakeholder groups;
• introducing a compulsory continuing professional development (CCPD) framework for all of industry, including QBCC licensees;
• priority to be given to the introduction of a levy, to support the funding of the QBCC’s operations (the Report does not identify who the levy would be issued to, noting that this will be a matter for further consideration by the Government); and
• reducing the number of board members on the Queensland Building and Construction Board from 10 people to 7 people.

The Queensland Government has stated that it supports the 17 recommendations of the Report (in principle).[2] 

It will be implementing 12 of the recommendations within a 90 day period as part of a 90 day action plan,[3] with all 17 recommendations to be implemented over a three year period.  

Quick refresher as to the QBCC Governance Review

On 16 November 2021, the Queensland Government announced a review would be held into the governance of the QBCC. The purpose of the review was to consider whether the QBCC governance arrangements were contemporary, fit for purpose and continued to reflect best industry practice. The Government noted that the regulatory role of the QBCC had expanded under the Queensland Building Plan 2017, and that the building industry had changed in response to the impacts of COVID, deeming the review necessary. Terms of Reference for the review were published reflecting these objectives. 

Former public administrator Jim Varghese AM was appointed to lead the review into the building “watchdog’s” structure.  Jim Varghese was formerly the CEO of Springfield Land Corporation, and previously acted as Director General of Education and Director General of the Department of Primary Industries in Queensland. He also conducted the review for the Queensland Government into ridesharing in 2016.

The QBCC Governance review commenced with the launch of a public online discuss forum, along with an online survey, followed by research and analysis of material. The Report was completed in May 2022 and released to the public on 29 June 2022, along with the Government’s Response. As noted above, the Government has advised that, in principle, it supports the 17 recommendations of the Report.

Outcomes of the Report

We discuss seven of the more notable recommendations out of the 17 identified in the Report in further detail below.

Refocus the QBCC’s regulatory role to licensing and compliance of the industry 

The Report considered concerns that had been raised about the QBCC being a ‘one stop shop’ for both consumers and industry, given its regulatory functions such as licensing, dispute resolution and the QHWS. The QBCC’s broad range of functions had positioned it to be viewed as the ‘judge and jury’, increasing the potential for conflicts of interest with its other functions.

By way of background, the QBCC administers the QHWS, which is the only first-resort home warranty scheme in Australia that seeks to protect consumers in the low-density domestic building sector. The QHWS also provides consumer protection if a building contractor fails to complete work or rectify defective work. However, the Report identified concerns raised by both consumers and industry that there was a need for more transparency, and that this could be achieved by separating the QHWS and compliance functions.[4]

The Report therefore concluded, given the perception that the QHWS administration conflicted with the QBCC’s other functions, that the QHWS should be administered by a separate entity.

It is proposed that this be achieved by transferring the QHWS administration to another Government department or agency, such as Treasury, to allow the QBCC to refocus its role on licensing and compliance. Under this proposed restructured model, the QBCC would investigate complaints made under the QHWS and charge a service fee or be remunerated for services undertaken for the QHWS.[5]

In its Response, the Government stated that the transfer of the QHWS administration to another government department or agency will require further analysis, and that it is important that a detailed business case and consultation is undertaken first.[6]

Establish an independent, quarantined Mediation, Resolution and Review Unit

The QBCC’s Dispute Resolution service and its Internal Review process were also considered as part of the Review. By way of background, after a homeowner has lodged a defective work complaint, the QBCC offers an early dispute resolution service that aims to resolve disagreements between parties through facilitation. 

If the dispute cannot be resolved, then the matter is referred to a building inspector who undertakes a site inspection where an outcome may be facilitated, or alternatively, a direction to rectify issued. The feedback discussed in the Report was that the QBCC’s dispute resolution policies and procedures were unclear and not transparent.

Separately, the QBCC has an Internal Review Unit that undertakes internal reviews of QBCC decisions (such as the issuing or non-issuing of directions to rectify). The Report noted that there was no requirement for independence between the Internal Review Unit officers and other QBCC Officers and that this has led to concerns within industry about bias. 

In response to these concerns, the Report recommended that an independent, quarantined Mediation, Resolution and Review Unit be established. This Unit would comprise the Adjudication Registry, Internal Review Unit and mediation services, and it would operate independently to the QBCC’s licensing and compliance functions.

The Government responded that a detailed business case will need to be prepared to inform decisions about the most appropriate method to be adopted for implementing this recommendation.[7]

Reduce the size of the QBC Board

The QBC Board is the QBCC’s governing body, and under the QBCC Act a maximum of 10 QBC Board members can be appointed, which is the current number of appointed QBC Board members.

The Report considered that research demonstrates that larger boards:

• inhibit corporate restructuring;
• tend to be more indecisive in crisis situations; and
• have impaired decision-making because of coordination difficulties.[8]

The Report recommended that the QBC Board be reduced to seven members, including the Chair.[9]

In its Response, the Government noted that the current QBC Board appointment expires on 30 November 2022, and this recommendation will be implemented as part of the upcoming appointment process.[10]

Strengthen and enhance management, licensing, investigative and technical staffing capability

The Report noted that the QBCC had several senior leaders depart over the past 12 months which had resulted in a loss of significant corporate knowledge and industry expertise. The Report found that the QBCC’s new emerging leaders will need to be supported with leadership and staff development programs.

In terms of the QBCC’s licensing capability, the Report identified that in 2020-2021, the QBCC licensed 93,147 individuals and companies under the QBCC Act, which currently provides for over 75 licence classes. Although the QBCC has some processes in place to guide employees, the Report found that there does not appear to be any formal licensing training programs or methods to evaluate whether staff have the skills and knowledge necessary for effective licensing assessment processes.[11] It also identified frustrations for individual applicants who felt they had been unnecessarily compelled to apply for recognised prior learning (RPL) in circumstances where the QBCC could have applied its discretion to deem a course equivalent to the prescribed qualification, but did not do so.[12] 

The Report concluded that implementation of new licensing requirements needs to be complemented by QBCC staff training and development on the content and application of the new requirements, and that licensing staff should undertake training in customer service delivery.[13]

The Government responded that a detailed business case will need to be prepared to identify any skills and knowledge gaps within the organisation as well as the costs and benefits associated with the specific actions.[14]

Implement a comprehensive and public compliance and enforcement strategy

The Report identified that the QBCC had not had a formalised and approved compliance and enforcement strategy since 1 July 2019, and without one, managerial oversight of performance is reduced and effectiveness and overall success of activities cannot be clearly measured. The Report found it was commonly reported that the QBCC is too reactive when monitoring industry instead of being proactive, and is conducting desktop investigations rather than adopting a ‘get out there and investigate’ approach.[15]

To address these findings, the Report recommended that the QBCC develop and implement a public compliance and enforcement strategy, which includes targeted outcome-focused activities.[16] It is also identified that it was important for the QBCC to promote its transition to an ‘insights-driven and outcomes-focused’ regulator through transformational roadshows, presentations at industry events, and engagement with peak organisations and stakeholder groups.[17]

In its Response, again the Government said that a business case will need to be prepared to inform these decisions and how best to achieve the desired outcomes of the recommendation.[18]

Strengthen and develop the building industry through effective education, support, information and advice

The Report noted that currently some professions within the construction industry are required to undergo CCPD, for example, building certifiers, however this is not the case for all industry practitioners or licensees. 

The Report considered whether a CCPD scheme for all QBCC licensees would improve standards and compliance with legislative requirements and technical standards.[19] It recommended that the QBCC introduce a CCPD framework for all of industry.[20]

The Government responded that the introduction of a CCPD\ program will involve legislative and administrative reforms and broad consultation through a regulatory impact assessment process.[21]

Implement a contemporary and sustainable funding model to enable the QBCC to effectively regulate the industry

The Report noted that QBCC is a self funded regulator which collects its revenue from licensing and compliance activities.  Despite this, it has been operating at a deficit since 2013 and its role as the building regulator has continued to expand.  The Report found that priority should be given to establishing a sustainable funding model, such as a levy.[22] However, the Report does not address who the levy would be issued to, or how the levy will be calculated, as these are matters for further consideration by the Government.

In its Response, the Government stated that further analysis of the costs and benefits is required to accurately balance industry and consumer needs without unnecessarily adding to costs to industry.[23]

Key take-aways

The implementation of the Report’s recommendations, which will occur over the next three years, will bring some significant changes, such as:

• quarantining of the dispute resolution unit;
• transferring the administration of the QHWS to another department to allow the QBCC to focus on its licensing and compliance functions;
• introducing a CCPD framework for QBCC licensees; and
• potentially introducing of funding measures such as a levy to support the QBCC’s growth.

The Government supports these recommendations (in principle) and has indicated that business cases will need to be prepared for many of these measures before the recommendations can be implemented.

We will continue to provide updates as to the implementation of the reforms. If you would like more information on QBCC related issues or QBCC licensing, please reach out to a member of the Construction and Infrastructure team at McCullough Robertson. We will be discussing these issues at our upcoming events.

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[1] Page 5 of the Review.

[2] Page 11 of the Response.

[3] Page 11 and Attachment 1 of the Response.

[4] Page 26 of the Report.

[5] Page 28 of the Report.

[6] Page 10 of the Response.

[7] Page 10 of the Response.

[8] Page 33 of the Report.

[9] Page 33 of the Report.

[10] Page 10 of the Response.

[11] Page 50 of the Report.

[12] Page 50 of the Report.

[13] Page 52 of the Report.

[14] Page 11 of the Response.

[15] Page 54 of the Report.

[16] Page 54 of the Report.

[17] Page 55 of the Report.

[18] Page 11 of the Response.

[19] Page 57 of the Report.

[20] Page 58 of the Report.

[21] Page 11 of the Response.

[22] Page 63 of the Report.

[23] Page 11 of the Response.